Friday,

June 25, 2004

Part II

Department of 

Health and Human 

Services

Centers for Medicare & Medicaid Services 

42 CFR Parts 405, 413, and 417

Medicare Program; Provider 

Reimbursement Determinations and 

Appeals; Proposed Rule

35716 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 405, 413, and 417

[CMS–1727–P] 

RIN 0938–AL54

Medicare Program; Provider 

Reimbursement Determinations and 

Appeals

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

SUMMARY: Subpart R of 42 CFR part 405 

consists of regulations governing 

Medicare reimbursement 

determinations, and appeals of those 

determinations by health care providers. 

(For sake of simplicity, through this 

proposed rule we use ‘‘reimbursement’’ 

to refer to Medicare payment under both 

the reasonable cost and prospective 

payment systems.) Under section 1878 

of the Social Security Act (the Act) and 

the regulations, the Provider 

Reimbursement Review Board (Board) 

has the authority to adjudicate certain 

substantial reimbursement disputes 

between providers and fiscal 

intermediaries. Board decisions are 

subject to review by the CMS 

Administrator, and the final agency 

decision of the Board or the 

Administrator, as applicable, is 

reviewable in Federal district court. In 

addition, under the regulations, fiscal 

intermediaries have the authority to 

hold hearings and adjudicate certain 

other payment and reimbursement 

disputes with providers. This proposed 

rule would update, clarify, and revise 

various provisions of the regulations 

governing provider reimbursement 

determinations, appeals before the 

Board, appeals before the intermediaries 

(for lesser disputes), and Administrator 

review of decisions made by the Board.

DATES: To be assured consideration, 

comments must be received at the 

appropriate address, as provided below, 

no later than 5 p.m. on August 24, 2004.

ADDRESSES: In commenting, please refer 

to file code CMS–1727–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

three ways (no duplicates, please): 

1. Electronically. You may submit 

electronic comments to http://

www.cms.hhs.gov/regulations/

ecomments or to http://

www.regulations.gov (attachments must 

be in Microsoft Word, WordPerfect, or 

Excel; however, we prefer Microsoft 

Word).

2. By mail. You may mail written 

comments (one original and two copies) 

to the following address ONLY: Centers 

for Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1727–P, P.O. 

Box 8017, Baltimore, MD 21244–8017. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786–

7197 in advance to schedule your 

arrival with one of our staff members. 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. (Because access to the 

interior of the HHH Building is not 

readily available to persons without 

Federal Government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. For 

information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:

Morton Marcus, (410) 786–4477.

SUPPLEMENTARY INFORMATION:

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–1727–P 

and the specific ‘‘issue identifier’’ that 

precedes the section on which you 

choose to comment. 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. After the close of the 

comment period, CMS posts all 

electronic comments received before the 

close of the comment period on its 

public website. Comments received 

timely will be available for public 

inspection as they are received, 

generally beginning approximately 3 

weeks after publication of a document, 

at the headquarters of the publication of 

a document, at the headquarters of the 

Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone (410) 786–7197. 

This Federal Register document is 

also available from the Federal Register

online database through GPO Access, a 

service of the U.S. Government Printing 

Office. The Web site address is: http://

www.gpoaccess.gov.

I. Background 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Background’’ at the beginning of your 

comments.] 

Section 1878(a) of the Social Security 

Act (the Act) allows providers to appeal 

to the Board final determinations made 

by the intermediary under section 

1861(v)(1)(A) of the Act (reasonable cost 

reimbursement), as well as certain 

determinations by the Secretary 

involving payment under section 

1886(d) (inpatient hospital prospective 

payment) and section 1886(b) 

(commonly known as the TEFRA 

payment system). (See section II.c.1., of 

this preamble, concerning how we 

propose to define ‘‘provider.’’) In 

addition, by regulation, providers are 

given the right to appeal to the Board or 

intermediary certain other 

determinations. A brief discussion of 

the original cost reimbursement, 

TEFRA, and prospective payment 

systems (PPS), and some of the types of 

determinations that are appealable, 

follows. 

For cost reporting years beginning 

before October 1, 1983, all providers 

were reimbursed for Part A (hospital 

insurance) covered items and services 

they furnished to Medicare beneficiaries 

on the basis of reasonable cost. 

Reasonable cost is defined at section 

1861(v)(1)(A) of the Act and 

implementing regulations at 42 CFR, 

Part 413. In 1982, the Congress 

determined that the reasonable cost 

reimbursement system should be 

modified to provide hospitals with 

better incentives to render services more 

efficiently. Accordingly, in the Tax 

Equity and Fiscal Responsibility Act of 

1982 (TEFRA), Pub. L. 97–248, the 

Congress amended the Act by imposing 

a ceiling on the rate of increase of 

inpatient operating costs recoverable by 

a hospital under Medicare.

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35717

The Social Security Amendments of 

1983 (Pub. L. No. 98–21) added section 

1886(d) to the Act, which effective with 

cost reporting periods beginning on or 

after October 1, 1983, changed the 

method of payment for inpatient 

hospital services under Medicare Part A 

for short-term acute care hospitals. The 

method of payment for these hospitals 

was changed from a cost-based 

retrospective reimbursement system to a 

system based on prospectively set rates. 

Under Medicare’s inpatient hospital 

PPS, payment is made at a 

predetermined specific rate for each 

hospital discharge (classified according 

to a list of diagnosis-related groups 

(DRGs)), excluding certain costs that 

continue to be reimbursed under the 

reasonable cost-based system. 

Other statutory changes expanded the 

types of providers that are subject to a 

PPS. The Balanced Budget Act of 1997 

(BBA), Pub. L. 105–33, established a 

prospective payment system for home 

health agencies (HHAs), for 

rehabilitation hospitals, and for all 

skilled nursing facilities (SNFs). The 

Balanced Budget Refinement Act of 

1999, Pub. L. 106–113, provided for the 

establishment of a PPS for long term 

care hospitals (LTCHs). Although many 

types of providers are now paid on a 

prospectively-determined basis, some 

types of providers, such as hospices, 

psychiatric hospitals, and children’s 

hospitals continue to be paid on a 

reasonable cost basis. 

Payments to providers are ordinarily 

made through private organizations 

known as fiscal intermediaries, under 

contracts with the Secretary. For 

covered items and services reimbursed 

on a reasonable cost basis, the 

intermediary pays a provider during a 

cost reporting year interim payments 

that approximate the provider’s actual 

costs. Under a PPS, providers are 

generally paid for each discharge after 

each bill is submitted. 

Regardless of whether the provider is 

paid under reasonable cost or under a 

PPS, the provider files an annual cost 

report after the cost year is completed. 

The intermediary then reviews or audits 

the cost report, determines the aggregate 

amount of payment due the provider, 

and makes any necessary adjustments to 

the provider’s total Medicare 

reimbursement for the cost year. This 

year-end reconciliation of Medicare 

payment for the provider’s cost 

reporting period constitutes an 

intermediary determination, as defined 

in § 405.1801(a). Under 

§§ 405.1801(a)(1) and (2) and 405.1803, 

the intermediary must render the 

provider with written notice of the 

intermediary determination for the cost 

period in a notice of amount of program 

reimbursement (NPR). The NPR is an 

appealable determination. 

In addition to the NPR, other 

determinations made by the 

intermediary or CMS for hospitals and 

other providers are appealable to the 

intermediary or Board (depending on 

the amount in controversy), such as: a 

denial of a hospital’s request for an 

adjustment to, or an exemption from, 

the TEFRA rate of increase ceiling (see 

§ 413.40); a denial of a HHA’s or SNF’s 

request for an adjustment to, or an 

exemption from, the routine cost limits 

that were in effect prior to a PPS for 

such providers (see § 413.30); a denial of 

a PPS hospital’s request to be classified 

as a sole community hospital (see 

§ 412.92) or rural referral center. Also, 

some health care entities such as renal 

dialysis facilities, rural health clinics 

(RHCs) and Federally qualified health 

centers (FQHCs) are treated as 

‘‘providers’’ for purposes of subpart R 

and have appeal rights before the 

intermediaries and the Board. Thus, for 

example, a renal dialysis facility may 

appeal to the intermediary or the Board 

a CMS denial of its request for an 

exception to its composite payment rate 

(see § 413.194(b)).

If a provider is dissatisfied with some 

aspect of an appealable intermediary or 

CMS determination, it may request a 

hearing before the intermediary or the 

Board, depending on the amount in 

controversy. For an amount in 

controversy that is at least $1,000 but 

less than $10,000, the provider may 

request an intermediary hearing before 

the intermediary hearing officer(s) 

under § 405.1811. If the amount in 

controversy is at least $10,000, the 

provider may request a hearing before 

the Board under section 1878(a) of the 

Act and § 405.1835 and § 405.1841. 

Alternatively, the provider may request 

a Board hearing with one or more 

additional providers under section 

1878(b) of the Act and § 405.1837, if the 

amount in controversy is, in the 

aggregate, at least $50,000 (such an 

appeal is known as a group appeal). 

Decisions by the intermediary hearing 

officer(s) or the Board are subject to 

further review. Intermediary hearing 

officers’ decisions are subject to review 

by a CMS reviewing official under 

section 2917 of the Provider 

Reimbursement Manual, Part 1, but 

there is no provision for judicial review 

of a final decision of the intermediary 

hearing officer(s) or CMS reviewing 

official, as applicable. Board decisions 

are subject to review by the 

Administrator or the Deputy 

Administrator of CMS, under section 

1878(f)(1) of the Act and § 405.1875. 

(The Secretary’s review authority under 

section 1878(f)(1) of the Act has been 

delegated to the Administrator, and 

redelegated to the Deputy 

Administrator, of CMS. (For ease of use, 

throughout this proposed rule we use 

the term ‘‘Administrator’’ to refer to 

either the Administrator or Deputy 

Administrator, and the term 

‘‘Administrator review’’ to review by 

either official.) A final decision of the 

Board, or any reversal, affirmance, or 

modification of a final Board decision 

by the Administrator, is subject to 

review by a United States District Court 

with venue under section 1878(f)(1) of 

the Act and § 405.1877 of the 

regulations. 

Most of the central provisions of the 

regulations governing provider 

reimbursement determinations and 

appeals are approximately 25 years old. 

On May 27, 1972 we published a final 

rule (37 FR 10722), which provided for 

the intermediary determination, NPR, 

intermediary hearing, and reopening of 

both intermediary determinations and 

intermediary hearing decisions. Five 

months later, the Congress added 

section 1878 to the Act, which 

established the Board and provided for 

review of Board decisions by the 

Secretary and for judicial review. (See 

Social Security Amendments of 1972, 

Pub. L. 92–603, section 243(a), 86 Stat. 

1420 (October 30, 1972). We then, on 

September 26, 1974 published a final 

rule (39 FR 34514), that implemented 

the 1972 amendments to the Act, and 

revised and redesignated the preexistent 

rules governing the intermediary 

determination, NPR, intermediary 

hearing, and reopening. These 

regulations were redesignated as subpart 

R of part 405 of title 42 of the CFR 

(subpart R) on September 30, 1977 (42 

FR 52826). We have revised these 

regulations on several occasions, largely 

in response to various amendments to 

section 1878 of the Act. 

For several reasons, we believe it is 

necessary and appropriate to reexamine 

many of the subpart R regulations 

governing provider reimbursement 

determinations and appeals. As 

described previously, the principal 

provisions of the regulations are about 

25 years old. In the intervening period, 

various issues have arisen regarding 

provider reimbursement determinations 

and appeals. Important parts of the 

regulations have been the subject of 

extensive litigation, the results of which 

indicate a need for reexamination of the 

rules. Also important is the 

development of a backlog of 

approximately 10,000 cases before the 

Board. Experience gained through long 

use of the regulations indicates that 

35718 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

revisions to the regulations would lead 

to a more effective and efficient appeal 

process. We believe that the revisions 

proposed would help the Board reduce 

the case backlog (or at least forestall 

substantial additions to it), and would 

also reflect changes in the statute, 

clarify our policy on various issues, and 

eliminate outdated material. Please note 

that the Provider Reimbursement 

Review Board’s instructions for 

providers and intermediaries, as well as 

the Board’s decisions on specific cases 

brought before it, are available on the 

web at http://www.hcfa.gov/regs/

prrb.htm.

II. Provisions of the Proposed Rule 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Definitions of or Decisions by Entities’’

at the beginning of your comments.] 

A. Definitions of Entities That Review 

Intermediary Determinations or 

Decisions by Such Entities; Definition of 

Reimbursement (§ 405.1801(a))

1. Intermediary Hearing Officer, CMS 

Reviewing Official, and CMS Reviewing 

Official Procedure 

As explained above, a provider may 

appeal the intermediary determination 

included in the NPR for a cost reporting 

period to either the intermediary 

hearing officer(s) or the Board, 

depending on the amount in 

controversy. A decision by the 

intermediary hearing officer(s) may be 

reviewed by a CMS reviewing official, 

whereas a Board decision may be 

reviewed by the CMS Administrator. 

Although the term ‘‘intermediary 

hearing’’ is defined in § 405.1801(a) by 

reference to § 405.1809, the terms 

‘‘intermediary hearing officer(s),’’ ‘‘CMS 

reviewing official,’’ and ‘‘CMS 

reviewing official procedure’’ are not 

defined in the regulations. We propose 

to add to § 405.1801(a) definitions for 

each of these three terms. The proposed 

definition of ‘‘intermediary hearing 

officer(s)’’ is ‘‘the hearing officer or 

panel of hearing officers provided for in 

§ 405.1817.’’ The other two terms would 

be defined by reference to proposed 

§ 405.1834, which is a new section that 

would add a CMS reviewing official 

procedure to subpart R. The proposed 

definition of ‘‘CMS reviewing official’’

is ‘‘the reviewing official provided for in 

§ 405.1834.’’ In turn, ‘‘CMS reviewing 

official procedure’’ would mean ‘‘the 

review provided for in § 405.1834.’’

2. Administrator Review 

We propose to revise the term 

‘‘Administrator’s review’’ in 

§ 405.1801(a) to read ‘‘Administrator 

review,’’ although the current definition 

of the former phrase would still apply 

to the new phrase. The current use of 

the possessive term ‘‘Administrator’s’’ is 

unnecessary, and the proposed 

replacement with the phrase 

‘‘Administrator review’’ would be 

consistent with current use of the nonpossessive terms ‘‘Board hearing,’’

‘‘intermediary hearing,’’ and ‘‘CMS 

reviewing official procedure.’’

3. Reviewing Entity 

We propose to add the term 

‘‘reviewing entity’’ to § 405.1801(a), 

which would be defined as ‘‘the 

intermediary hearing officer(s), a CMS 

reviewing official, the Board, or the 

Administrator, as applicable.’’ We 

believe that ‘‘reviewing entity’’ is an 

appropriate term for the various entities 

that can review intermediary 

determinations (that is, the intermediary 

hearing officer(s) and the Board) or the 

entities that can review intermediary 

hearing officer and Board decisions (that 

is, a CMS reviewing official and the 

Administrator, respectively). For 

example, current §§ 405.1885(a) and (c) 

provide for reopening of an 

intermediary determination by the 

intermediary that made the 

determination, and reopening of a 

decision by the administrative body that 

issued the decision. Current 

§ 405.1885(a) specifies three different 

decisionmaking bodies as having 

reopening authority over one of their 

respective decisions: the intermediary 

hearing officer(s), the Board, and the 

Administrator. As a conforming 

amendment to proposed § 405.1834 (see 

section II.G. below), we propose to 

amend § 405.1885(a) to recognize the 

CMS reviewing official’s authority to 

reopen a prior decision (see section 

II.V.1. of this preamble). Instead of 

adding the phrase ‘‘CMS reviewing 

official’’ to the list of decisionmakers 

with reopening authority under 

§ 405.1885(a), we believe it facilitates 

ease of reference to use the phrase 

‘‘reviewing entity’’ in lieu of 

enumerating all four decisionmakers. 

4. Reimbursement 

The term ‘‘reimbursement,’’ as 

referring to compensation for providers, 

appeared in our regulations, and in 

industry parlance, at a time in which all 

providers were paid on the basis of their 

reasonable costs. Upon the development 

of the inpatient hospital PPS, it became 

customary for some to use ‘‘payment’’

when speaking of remuneration to a 

hospital covered under the inpatient 

hospital PPS and ‘‘reimbursement’’

when referring to a hospital or other 

provider covered under the reasonable 

cost system, whereas others continue to 

use ‘‘reimbursement’’ to refer to 

compensation under either reasonable 

cost or a PPS, and still others use the 

terms interchangeably. We believe it 

would be verbose, in places where both 

reasonable cost and a PPS are 

implicated, to use ‘‘reimbursement or 

payment.’’ Therefore, we propose to 

define ‘‘reimbursement’’ as 

encompassing compensation under 

either the reasonable cost or a PPS, so 

as to make clear that by using 

‘‘reimbursment’’ we do not mean to 

exclude providers paid under a PPS or 

some other payment system. 

B. Calculating Time Periods and 

Deadlines (§§ 405.1801(a) and (d) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Calculating Time Periods’’ at the 

beginning of your comments.] 

1. Basic Proposals

Under section 1878 of the Act and our 

regulations at 42 CFR, part 405, subpart 

R, various time periods and deadlines 

are prescribed for taking specific 

actions. In addition, the reviewing 

entities routinely require completion of 

specific actions within certain time 

periods or by a specific deadline. We 

have identified several situations that 

the present regulations do not 

specifically address. For example, 

section 1878(f)(1) of the Act and current 

§ 405.1875(g)(2) authorize the 

Administrator to review a Board 

decision within 60 days of when the 

provider received notification of the 

Board’s decision. Under current 

§ 405.1801(a), the phrase ‘‘date of 

receipt’’ means ‘‘the date on the return 

receipt of ‘return receipt requested’

mail, unless otherwise defined.’’ The 

regulations do not address, however, 

how to determine the date of provider 

receipt under § 405.1875(g)(2) if a Board 

decision is not sent by return receipt 

requested mail, the provider does not 

return or date any receipt, or the return 

receipt certificate is destroyed or 

obscured. The potential for uncertainty 

seems greater for material exchanged 

between providers and intermediaries 

because experience indicates they do 

not use return receipt mail regularly. 

Similarly, the various reviewing 

entities routinely issue orders requiring 

that certain actions be taken within a 

prescribed time period. (For example, 

the Board may require submission of 

position papers within 90 days of an 

order.) Section 405.1801(a) defines 

‘‘date of filing’’ and ‘‘date of submission 

of materials’’ to mean ‘‘the day of the 

mailing (as evidenced by the postmark) 

or hand-delivery of materials, unless 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35719

otherwise defined in this subpart.’’

However, the regulations do not address 

how to determine the date of 

submission (or filing) of materials 

where, for example, the envelope 

containing a Board order is destroyed or 

lost, has no postmark, or has an 

obscured postmark. 

The current regulations also do not 

address how to determine the first, 

subsequent, and last days of a 

prescribed time period. For example, no 

provision in subpart R addresses how to 

determine the end of a designated time 

period when the last day of the period 

is a Saturday, Sunday, Federal legal 

holiday, or other nonwork day for 

Federal employees. 

Accordingly, we believe it is 

necessary and appropriate to revise our 

regulations at subpart R to ensure that 

providers, reviewing entities and others 

may determine precisely the various 

time periods and deadlines imposed by 

section 1878 of the Act, the regulations, 

and particular orders of a reviewing 

entity. In order to meet this objective, 

we propose to remove the current 

definitions in § 405.1801(a) of ‘‘date of 

filing’’ and ‘‘date of submission of 

materials’’ and instead provide specific 

provisions that address the time to 

appeal a determination or decision of an 

intermediary, the Board or the 

Administrator. Thus, proposed 

§ 405.1811(a)(3) would specify the time 

to request an intermediary hearing; 

proposed § 405.1834(c) would explain 

the time to request review by a CMS 

reviewing official of an intermediary 

hearing officer decision; proposed 

§ 405.1835(a)(3) would state the time to 

request a Board hearing; and proposed 

section 1875(c)(1) would specify the 

time to seek Administrator review. 

Likewise, proposed § 405.1875(e)(2) 

would specify the time the 

Administrator must render a decision 

(where the Administrator has taken 

review of a Board decision or other 

reviewable Board action), and proposed 

section 405.1877(b) would state the time 

a provider may request judicial review 

of a final Board or Administrator 

decision. As a general matter, we 

propose to calculate the beginning 

period that a party has to take action 

with reference to the date the party 

received the triggering notice, and we 

propose to calculate the end of the 

period that the action must be taken 

with reference to the date the reviewing 

entity must receive the party’s 

submission. (We are using ‘‘party’’ in 

the previous sentence in a non-technical 

sense.) Also, generally throughout the 

preamble and the text of this proposed 

rule we avoid using the phrase ‘‘within 

x days’’ and instead use ‘‘no later than 

x days after’’ in order to make clear that 

the party or reviewing entity has the 

benefit of the last day of the period 

specified. Where the language ‘‘within’’

is used (because it would be 

cumbersome to say ‘‘no later than’’) it 

should be understood that the party or 

reviewing entity has the benefit of the 

last day of the period specified.) 

Accordingly, we propose to revise the 

current definition of ‘‘date of receipt’’ in 

§ 405.1801, and we propose to add a 

new paragraph (d) to § 405.1801, which 

would prescribe rules for determining 

the first, subsequent, and last days of a 

designated time period. 

2. Definition of ‘‘Date of Receipt’’

We propose to revise the definition 

for ‘‘date of receipt’’ as the date a 

document or other material is received. 

As part of the proposed definition, we 

would specify how we determine when 

a document or other material is received 

by: (1) a party or non-party involved in 

proceedings before a reviewing entity; 

and (2) a reviewing entity.

a. Determining Date of Receipt by 

Parties and Non-Parties Involved in 

Proceedings Before a Reviewing 

Entity—Use of 5-Day Presumption 

Under our proposal, we would 

establish the presumption that the 

receipt date of documents or other 

materials sent to providers, 

intermediaries, and other entities 

involved in proceedings is 5 days after 

the postmark date. The presumption 

would apply to documents and other 

materials sent by the reviewing entity to 

parties and non-parties as well as to 

those sent from one party or non-party 

to another party or non-party. However, 

this presumption would be rebutted if a 

preponderance of the relevant evidence 

established that the intermediary notice, 

reviewing entity document, or 

submitted material, as applicable, was 

actually received on a later date. The 

proposed definition further states that 

the phrase ‘‘date of receipt’’ in the 

definition is, as applied to a provider, 

synonymous with the term ‘‘notice’’ in 

section 1878 of the Act and in subpart 

R. 

We believe this definition is necessary 

and appropriate in order to facilitate 

accurate determinations of the date of 

receipt by parties and affected 

nonparties of documents and materials 

pertaining to reviewing entity 

proceedings. Furthermore, as discussed 

below with respect to § 405.1835(a)(3) 

(see section II.D.3. of this preamble), we 

believe the proposed definition is 

appropriate given the apparent need to 

dispel potential confusion about when 

the 180-day period for submitting a 

Board appeal begins to run. Under 

proposed § 405.1835(a)(3), we would 

interpret the references to notice in 

section 1878(a)(3) of the Act and in 

subpart R to mean that the 180-day 

appeal period commences on the date of 

receipt by the provider of the NPR for 

the intermediary determination or, 

where applicable, upon the expiration 

of the 12-month period for issuance of 

the NPR. Our proposal that the phrase 

‘‘date of receipt’’ in this definition is, as 

applied to a provider, synonymous with 

the word ‘‘notice’’ in section 1878 of the 

Act, facilitates our new interpretation of 

the 180-day appeal period prescribed in 

section 1878(a)(3) of the Act and in the 

regulations. 

Our proposal to determine the 

presumed receipt date of a document or 

other material through a ‘‘5-day 

convention’’ is premised on several 

factors. Use of a time period convention 

would avoid any problem of verifying 

when a document or other material is 

actually received, except where 

evidence is presented to rebut the 

presumed 5-day period. Also, use of a 

5-day period as the presumed receipt 

date would be similar to our policies for 

reconsideration and appeal for an 

individual under Medicare Part A (see 

§ 405.722), and for reconsideration and 

appeal of determinations affecting 

participation in the Medicare program 

(see § 498.22(b)(3) and § 498.40(a)(2)), 

and it would ensure enough time for the 

period typically necessary for receipt of 

first class, United States mail. 

Also, we believe our proposal to allow 

for rebuttal of the 5-day convention for 

determining the receipt date provides an 

adequate means for a provider, or any 

entity involved in reviewing entity 

proceedings to establish that it actually 

received a document or other material 

on a later date. We propose to limit the 

rebuttal opportunity to a satisfactory 

showing of actual receipt on a date later

than the presumed date, due to the need 

for the intermediary (in the case of 

intermediary notices) or a reviewing 

entity to know in advance that the 

prescribed period for taking a given 

action commences no earlier than a date 

certain. For example, in order to ensure 

compliance with the 60-day period for 

Administrator review of a Board 

decision under section 1878(f)(1) of the 

Act and § 405.1875, the Administrator 

must know in advance that the review 

period commences no earlier than a date 

certain. We believe it is reasonable to 

permit a provider to establish actual 

receipt of a Board decision after the 

presumed 5-day period ends, because 

the Administrator would still be able to 

render a timely decision. But if we 

permit the provider to establish actual 

35720 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

receipt before the presumed 5-day 

period ends, the Administrator might 

not have enough remaining time to meet 

the 60-day deadline. 

b. Determining Date of Receipt by 

Reviewing Entity—Presumption of Date 

Stamp 

For materials submitted to a 

reviewing entity, we would establish the 

presumption that the receipt date is the 

date the reviewing entity (or its 

substitute, see following paragraph) 

stamped ‘‘Received’’ on the document 

or other submitted material. The 

presumption would be rebutted if a 

preponderance of the relevant evidence 

established that the document or other 

submitted material was actually 

received on a different date by the 

reviewing entity.

For intermediary hearings where the 

intermediary hearing officer has not yet 

been appointed or is not presiding 

currently, the date of receipt by the 

intermediary hearing officer would be 

determined by the date stamped 

‘‘Received’’ by the intermediary. In 

other words, the intermediary would act 

as a substitute for the intermediary 

hearing officer for this purpose. 

Similarly, we propose to determine 

receipt date by a CMS reviewing official 

or the CMS Administrator by reference 

to the date stamped ‘‘Received’’ by 

CMS’s Office of the Attorney Advisor 

because that Office would seem to be 

the appropriate recipient in light of the 

Administrator’s many other duties, and 

because the proposal is consistent with 

our longstanding practice (see 59 FR 

14628, 14645 (March 29, 1994) for a 

description of the Office of the Attorney 

Advisor). 

Our proposal to use the date a 

document or other material is received 

by the reviewing entity is based on the 

presumption of administrative 

regularity in agency action. In view of 

that presumption, it seems reasonable to 

have our proposed definition presume 

that the receipt date is the date the 

reviewing entity or its substitute 

stamped ‘‘Received’’ on the document 

or other submitted material. We also 

believe reasonable our proposal that the 

presumed receipt date may be rebutted 

if a different date of receipt is 

established by a preponderance of the 

relevant evidence. Given the 

presumption of administrative 

regularity, we considered proposing use 

of the stricter standard of clear and 

convincing evidence, but rejected this 

alternative for the sake of consistency 

and ease of application. That is, as 

discussed above, the preponderance of 

the relevant evidence standard would 

apply for purposes of establishing that 

a provider or entity received a 

document on a date other than the 

presumed receipt date, and the 

preponderance of the evidence standard 

seems easier to apply than the clear and 

convincing evidence standard. 

3. Determining Specific Days in 

Calculating Time Periods and Deadlines 

We propose to add a new paragraph 

(d) to § 405.1801 in order to facilitate 

the determination of the first, 

subsequent, and last days included in a 

time period prescribed or allowed under 

section 1878 of the Act or subpart R or 

authorized by a reviewing entity. As to 

the first day of such a period, the day 

of the act, event, or default from which 

the designated time period begins to run 

would be excluded from the period 

under proposed paragraph (d)(1).

Proposed paragraph (d)(2) provides 

that, with two exceptions, each 

succeeding calendar day, including the 

last day, would be included in the time 

period. The first exception is that, for an 

act to be performed by a reviewing 

entity, a calendar day would be 

excluded if the intermediary (for 

purposes of an intermediary notice) or 

the reviewing entity is unable to 

conduct business in the usual manner 

due to extraordinary circumstances 

beyond its control (for example, natural 

or other catastrophe, weather 

conditions, fire, or furlough). In such 

cases, the designated time period would 

resume on the next work day the 

intermediary or reviewing entity is 

again able to conduct business in the 

usual manner. 

The second exception proposed under 

paragraph (d)(2) is that the last day of 

the designated time period would be 

excluded if it is a Saturday, Sunday, 

Federal legal holiday, other nonwork 

day for Federal employees, or, in the 

case of a deadline for submission of 

material to the intermediary (for 

purposes of an intermediary notice) or 

a reviewing entity, a day when the 

intermediary or reviewing entity is not 

conducting business. In the case of any 

such excluded day, the designated time 

period would continue to run until the 

end of the next day that is not one of 

the above-described days. Furthermore, 

paragraph (d)(4) would provide that a 

reviewing entity is, for purposes of 

paragraph (d), deemed to be the 

intermediary in the absence of duly 

appointed and presiding intermediary 

hearing officer(s), and to include, in the 

context of review by a CMS reviewing 

official or the Administrator, the Office 

of the Attorney Advisor. 

We believe the proposed addition of 

paragraph (d) to § 405.1801 is necessary 

and appropriate to ensure the accurate 

determination of the specific days to be 

included in the calculation of a time 

period or deadline prescribed under 

section 1878 of the Act, subpart R, or by 

a reviewing entity. Also, we believe that 

proposed paragraph (d) will accomplish 

these objectives because much of that 

paragraph seems reasonably based on 

and adapted from other authorities. 

Specifically, proposed paragraphs (d)(1) 

and (d)(3) are adapted from the first and 

second sentences of Rule 6(a) of the 

Federal Rules of Civil Procedure, which 

address the same kinds of problems for 

civil actions. Also, proposed paragraph 

(d)(3) is authorized by sections 216(j) 

and 1872 of the Act. 

Proposed paragraph (d)(2) reflects our 

concern that a prolonged period in 

which an intermediary (as to 

intermediary notices) or a reviewing 

entity is unable to conduct business in 

the usual manner due to extraordinary 

circumstances beyond its control could 

result in the intermediary or reviewing 

entity being required to take action on 

numerous matters immediately after the 

prolonged period of inactivity. For 

example, the intermediary could be 

required to issue numerous NPRs, and/

or a reviewing entity might have to 

render multiple decisions on the first 

business day after the work 

interruption. In fact, the Board and the 

Administrator were confronted with 

similar problems at the end of a 

prolonged furlough of Federal 

employees in late 1995 and early 1996. 

We believe proposed paragraph (d)(2) 

would eliminate this problem by 

requiring that a designated time period 

would be suspended for as long as the 

intermediary or reviewing entity is 

unable to conduct business in the usual 

manner due to extraordinary 

circumstances beyond its control. 

Extraordinary circumstances would be 

defined as circumstances such as 

natural or other catastrophe, weather 

conditions, fire, or furlough. 

Finally, in proposed paragraph (d)(4) 

we would provide that, for purposes of 

paragraph (d), a reviewing entity would 

include an intermediary in the situation 

where an intermediary officer has not 

yet been appointed (or if appointed, is 

not yet presiding), and would also 

include the Office of the Attorney 

Advisor. 

C. Providers Under Subpart R; Limited 

Applicability to Non-Provider Entities 

(§ 405.1801(b)) 

1. Providers 

Current § 405.1801(b)(1) states that 

the term ‘‘provider’’ includes, for 

purposes of subpart R, hospitals paid 

under the PPS. However, neither 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35721

§ 405.1801(b)(1) nor any other 

regulation identifies all of the entities 

that constitute providers under subpart 

R. 

We believe it is necessary and 

appropriate to identify all of the entities 

that qualify as a provider for purposes 

of subpart R. Sections 1861(u), 1878(j), 

and 1881(b)(2)(D) of the Act recognize 

various types of entities as providers for 

purposes of provider reimbursement 

determinations and appeals. By 

collecting and enumerating the various 

types of providers in one regulation, we 

believe the potential for confusion about 

this matter can be forestalled. Thus, we 

propose to amend § 405.1801(b)(1) to 

recognize as a provider under subpart R 

each entity recognized under the Act for 

purposes of provider reimbursement 

determinations and appeals.

In accordance with the definition of 

‘‘provider of services’’ in section 

1861(u) of the Act, we propose to 

recognize specifically a hospital, critical 

access hospital (CAH), SNF, 

comprehensive outpatient rehabilitation 

facility (CORF), HHA, and hospice 

program. Also, a RHC and a FQHC 

would be included in accordance with 

section 1878(j) of the Act, and an end 

stage renal disease (ESRD) facility 

would be recognized under section 

1881(b)(2)(D) of the Act. Our proposed 

revision to § 405.1801(b)(1) would also 

recognize as a provider any other entity 

treated as a provider under the Act, in 

order to ensure recognition in subpart R 

of any other entity that may qualify as 

a provider under the Act for purposes of 

provider reimbursement determinations 

and appeals. 

2. Non-Provider Entities 

Current § 405.1801(b)(2) addresses 

entities that do not qualify as providers 

under the Act, but which are 

reimbursed on the basis of information 

included in required cost reports. Such 

non-provider entities include health 

maintenance organizations (HMOs) and 

competitive medical plans (CMPs). 

Section 405.1801(b)(2) states that such 

non-provider entities do not qualify for 

Board review, but that the rules in 

subpart R regarding intermediary 

hearings ‘‘are applicable to the [nonprovider] entities to the maximum 

extent possible’’ where the amount of 

program reimbursement in controversy 

is at least $1,000. 

We believe § 405.1801(b)(2) needs 

clarification and revision as to the 

specific applicability of subpart R to 

non-provider entities. We believe the 

regulation is incomplete in stating that 

non-provider entities do not qualify for 

a Board hearing. Under our 

longstanding policy, these entities 

cannot qualify for a Board hearing or an 

intermediary hearing because both types 

of hearings are available only to 

providers. (We note that non-provider 

entities such as HMOs and CMPs may 

instead have a right to a hearing before 

a CMS reviewing official if the amount 

in controversy is at least $1,000.) Thus, 

we propose to revise § 405.1801(b)(2) to 

state that non-provider entities may not 

obtain an intermediary hearing or a 

Board hearing. 

We believe § 405.1801(b)(2) further 

states that rules for intermediary 

hearings are applicable to non-provider 

hearings ‘‘to the maximum extent 

possible’’ also needs clarification. It is 

our longstanding policy that only the 

procedural rules in subpart R apply to 

non-provider hearings before a CMS 

reviewing official. In addition, we 

believe that non-provider hearings 

before a CMS reviewing official are 

more analogous to a Board hearing than 

an intermediary hearing. For example, 

non-provider hearings before a CMS 

reviewing official are adversarial, which 

is also true of Board hearings (see 

§ 405.1843) but not intermediary 

hearings (see § 405.1815). Accordingly, 

we propose to revise § 405.1801(b)(2) to 

state that if a hearing is available to a 

non-provider entity on an amount in 

controversy of at least $1,000, the 

procedural rules for a Board hearing 

under this subpart are applicable to the 

maximum extent possible. The phrase 

‘‘procedural rules’’ in proposed 

§ 405.1801(b)(2) would have the same 

meaning as the phrase ‘‘rules of agency 

organization, procedure, or practice’’ in 

the Administrative Procedure Act, 5 

U.S.C. § 553(b)(3)(A). 

D. Provider Hearing Rights 

(§ 405.1803(d), § 405.1811, and 

§ 405.1835) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Provider Hearing Rights’’ at the 

beginning of your comments.] 

Under section 1878(a) of the Act and 

§§ 405.1835 and 405.1841 of the 

regulations, a provider may obtain a 

Board hearing if it meets three 

jurisdictional requirements: (1) The 

provider is dissatisfied with its 

Medicare reimbursement for a cost 

reporting period; (2) the amount in 

controversy is at least $10,000 (at least 

$50,000 for a group appeal); and (3) the 

provider files a timely request for a 

hearing to the Board. The same 

jurisdictional requirements govern 

provider requests for an intermediary 

hearing under § 405.1811, except the 

amount in controversy requirement is 

$1,000 or more but less than $10,000. 

For the reasons set forth in this 

section, we believe it is necessary and 

appropriate to revise the regulations in 

subpart R governing provider hearing 

requests. We discuss the first and third 

jurisdictional requirements below, and 

address the amount in controversy 

requirement separately for § 405.1839 in 

section II. I. of this preamble. 

1. Provider Dissatisfaction With 

Medicare Reimbursement; Revised SelfDisallowance Policy 

Section 1878(a)(1)(A) of the Act 

authorizes a provider to obtain a Board 

hearing if the provider is dissatisfied 

with a final determination by: (i) the 

intermediary, of the total amount of 

program reimbursement for a cost 

reporting period, or (ii) the Secretary, as 

to the amount of payment under 

sections 1886(b) or (d) of the Act. (We 

note that the references to ‘‘final 

determination’’ in section 1878(a)(1)(A) 

of the Act are reflected in 

§ 405.1801(a)(1) through (a)(3) and 

§ 405.1803 of the regulations, which 

require the intermediary to issue to the 

provider a written NPR reflecting the 

intermediary determination for the cost 

reporting period.) Provider 

dissatisfaction with Medicare 

reimbursement is also a requirement for 

a hearing before the intermediary and 

the Board under §§ 405.1811(b) and 

§ 405.1841(a)(1), respectively. Under our 

original policy, we required a provider 

to make a specific claim for an item on 

its cost report as a prerequisite to 

appeal. That is, under that policy, a 

provider that did not claim an item on 

its cost report did not meet the 

dissatisfaction requirement for purposes 

of obtaining an intermediary or Board 

hearing. We did not permit a provider 

to ‘‘self-disallow’’ an item (even if the 

intermediary had no discretion to award 

payment for the item) and then seek an 

appeal before the Board. 

Several court decisions addressed our 

original self-disallowance policy, 

culminating in the Supreme Court’s 

decision in Bethesda Hospital 

Association v. Bowen, 485 U.S. 399 

(1988). The providers in the Bethesda

case self-disallowed their malpractice 

insurance costs by submitting cost 

report claims that complied with a 

regulation, and seeking additional 

reimbursement before the Board. The 

Board dismissed the providers’ appeal 

for lack of jurisdiction based on the selfdisallowance policy. The Supreme 

Court held that the plain language of the 

dissatisfaction requirement in section 

1878(a)(1)(A) of the Act supported 

Board jurisdiction under the facts of the 

case. The Court reasoned that the 

intermediary had no authority to award 

35722 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

reimbursement in excess of the 

regulation by which it was bound, and 

that it would be futile for a provider to 

try to persuade the intermediary 

otherwise. 

Following the Bethesda decision, we 

no longer required providers to claim 

items for which the intermediary did 

not have the discretion to award 

payment due to a regulation or manual 

provision. (See former Appendix A, 

§B.1. of the Provider Reimbursement 

Manual (PRM)). We believe it is 

appropriate to codify our policy in 

regulations and we are taking this 

opportunity to make the following 

proposals. We propose to include, as an 

interpretation of the dissatisfaction 

jurisdictional requirement, our selfdisallowance policy in a revised 

§ 405.1811(a)(1) and § 405.1835(a)(1) for 

intermediary and Board hearings, 

respectively.

Under our proposal, in order to 

preserve its appeal rights, a provider 

must either claim an item on its cost 

report where it is seeking 

reimbursement that it believes to be in 

accordance with Medicare policy, or 

self-disallow the item where it is 

seeking reimbursement that it believes 

may not be in accordance with Medicare 

policy (for example, where the 

intermediary does not have the 

discretion to award the reimbursement 

sought by the provider). In order to selfdisallow an item, the provider would be 

required to follow the applicable 

procedures for filing a cost report under 

protest, which are contained currently 

in § 115 of the PRM, Part 2 (CMS Pub. 

15–2). Note that we are using the term 

‘‘item’’ instead of ‘‘cost’’ to emphasize 

that our proposed policy would refer to 

determinations of amounts due to 

providers subject to a prospective 

system as well as determinations of 

reimbursement due to providers that are 

paid under cost reimbursement 

principles. 

We believe the self-disallowance rule 

proposed in § 405.1811(a)(1)(i) and 

§ 405.1835(a)(1)(i) is appropriate under 

the Bethesda decision. We further 

believe that our proposed policy is a 

reasonable response to statements by the 

Bethesda providers and others that it is 

necessary, for any reimbursement 

request in excess of the amount allowed 

under program policy, to raise the entire 

payment request before the Board, 

because it would be improper to include 

a cost report claim for more payment 

than is permitted by Medicare policy. It 

has been our longstanding policy that a 

cost report claim at variance with 

Medicare policy is not improper, 

provided that such a claim is not 

intended to procure an intermediary 

determination (or reviewing entity 

decision) by fraud or similar fault. For 

example, given that the Bethesda

providers’ request for additional 

reimbursement before the Board was 

premised on their disagreement with 

and challenge to a reimbursement 

regulation, it would not have been 

improper for them to include cost report 

claims in conformity with their goodfaith view as to the proper amount of 

reimbursement. 

2. Audits of Self-Disallowed Items 

Under our proposed policy regarding 

self-disallowed costs, the amount of any 

cost report claim or intermediary 

disallowance may differ from the 

amount of reimbursement requested 

through a Board or intermediary 

hearing. Intermediary audits of provider 

items are usually limited to items 

included in a cost report, which 

presumably would often exclude selfdisallowed items. Thus, in cases where 

a provider self-disallows an item by 

foregoing any cost report claim (or 

including less than a full claim) and 

appealing to the Board or intermediary, 

we would expect such self-disallowed 

items to be unaudited. 

We believe the likelihood that selfdisallowed items are unaudited is 

reason for concern in the event of 

reviewing entity decisions, court 

judgments, and settlement agreements 

that require payment of self-disallowed 

items. Specifically, in cases where a 

self-disallowed item is held 

reimbursable in a final decision by a 

reviewing entity or a final, nonappealable court judgment, the 

intermediary might pay the provider for 

unaudited self-disallowed items. The 

same problem could develop where an 

administrative or judicial settlement 

agreement requires payment of a selfdisallowed item. We believe that these 

results may prove inappropriate in 

specific cases. 

We believe that, given the potential 

for inappropriate payment of unaudited 

self-disallowed items, it is necessary 

and appropriate to provide for 

intermediary audits of these items. 

Thus, we propose to add a new 

paragraph (d) to § 405.1803, which 

would authorize CMS to require 

intermediary audits of self-disallowed 

items before these items may be paid 

according to a final agency decision, a 

final, non-appealable court judgment, or 

an administrative or judicial settlement 

agreement. Proposed § 405.1803(d) 

would further provide that CMS’s 

authority to require audits of selfdisallowed items is inapplicable to the 

extent such audits would be 

inconsistent with a governing court 

order or settlement agreement.

3. Determining Timeliness of Hearing 

Requests (§§ 405.1811 and 1835) 

Section 1878(a)(3) of the Act requires 

a provider to file any request for a Board 

hearing within 180 days ‘‘after notice’’

of a final determination by an 

intermediary or the Secretary. Moreover, 

section 1878(a)(1)(B), (C), and (a)(3) of 

the Act require that, in the absence of 

a timely final determination, a Board 

hearing request must be filed within 180 

days ‘‘after notice’’ of such 

determination ‘‘would have been 

received’’ if the determination had been 

made on a timely basis. Under current 

§ 405.1835(a)(2) and § 405.1841(a)(1) of 

the regulations, any request for a Board 

hearing must be filed with the Board 

within 180 days of the date the NPR was 

mailed to the provider. Also, current 

§ 405.1835(c) and § 405.1841(a)(1) 

provide that if an NPR is not issued 

within 12 months of the intermediary’s 

receipt of an appropriate cost report, 

then any hearing request must be filed 

with the Board within 180 days after the 

expiration of the 12 month period for a 

timely NPR. Comparable requirements 

apply under § 405.1811(a) for purposes 

of determining the timeliness of a 

provider request for an intermediary 

hearing. 

We believe it is necessary to revise the 

regulations governing the timeliness of 

hearing requests before the Board and 

intermediary. There is some potential 

for confusion in determining the 180-

day appeal period, especially as to the 

beginning date of the period. For 

example, for Board appeals from a 

timely NPR, section 1878(a)(3) of the 

Act states that the period commences 

‘‘after notice’’ of the final determination, 

but does not specify how to determine 

the date of such notice. For Board 

hearings, the beginning date under 

§ 405.1841(a)(1) is the date the NPR is 

mailed to the provider. But under 

§ 405.1811(a), the date of the NPR starts 

the period for intermediary hearing 

requests. 

In our opinion, the references in 

section 1878(a)(3) of the Act to ‘‘after 

notice’’ are ambiguous as to the 

beginning date for the 180-day period 

for Board hearing requests. We believe 

the statute can be interpreted reasonably 

to permit use of any of the following 

events as the beginning date: the date 

the provider receives the final 

determination; the mailing date of the 

determination; and, the date of the 

determination. 

We propose to revise the regulations 

to provide that the 180-day period for 

requesting a Board or intermediary 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35723

hearing begins on the date of receipt by 

the provider of the intermediary 

determination or, where applicable, the 

expiration date of the 12-month period 

for issuance of a timely NPR by the 

intermediary. These proposed revisions 

are premised in part on our belief that 

it is unnecessary for the beginning date 

of the 180-day period to be determined 

differently for hearing requests to the 

intermediary (that is, the NPR date) and 

the Board (that is, the NPR mailing 

date). Although we considered the three 

alternatives of receipt date, NPR date, 

and NPR mailing date, our proposed use 

of receipt date is based on several 

factors. 

We believe the proposed use of 

receipt date is consistent with the 

reference in section 1878(a)(3) of the Act 

to when an untimely final 

determination ‘‘would have been 

received,’’ and to the various references 

to receipt date in section 1878(f)(1) of 

the Act and current § 405.1875 and 

§ 405.1877 pertaining to the beginning 

date of the 60-day period for 

Administrator and judicial review. Also, 

determining the beginning date of the 

180-day appeal period by reference to 

receipt date is consistent with our more 

general proposal in § 405.1801(a) to 

redefine the phrase ‘‘date of receipt’’ as 

applied to a provider, as discussed in 

section II.B.2.a. of this preamble. 

Moreover, under the 5-day convention 

for determining date of receipt under 

our proposed definition, the provider 

likely would have the NPR in hand by 

the proposed beginning date of the 180-

day appeal period. Thus, the beginning 

date of the 180-day appeal period would 

probably be a day on which the provider 

could actually start to determine 

whether to request a hearing. 

Our proposal also includes a different 

means of determining the ending date of 

the 180-day appeal period. Under 

current § 405.1811(a)(1) and 

§ 405.1841(a)(1), the ending date is the 

date of filing with the intermediary or 

Board, respectively, which is 

determined under § 405.1801 by 

reference to the date of mailing or hand 

delivery of the hearing request. We 

propose to determine the ending date of 

the appeal period by the date the 

intermediary or Board received the 

hearing request. As discussed in II.B.2.b. 

of this preamble, the date a reviewing 

entity receives a hearing request or other 

document is presumed to be the date 

stamped ‘‘Received.’’

We believe that the proposed use of 

receipt date by the Board or 

intermediary is consistent with the 

reference in section 1878(a)(3) of the Act 

to ‘‘provider files a request for a 

hearing.’’ The word ‘‘file’’ is defined in 

Black’s Law Dictionary in terms of 

depositing material in the custody or 

among the records of a court, and 

delivering material to the proper official 

for filing as a matter of record. 

Determining the ending date of the 180-

day appeal by reference to when the 

Board or intermediary receives the 

hearing request comports with this 

definition and the usual practice of the 

courts. Also, given our proposal to 

determine the beginning date by 

reference to provider receipt date, we 

believe the proposed use of Board or 

intermediary receipt date to determine 

the ending date is an appropriate 

corresponding change. 

4. Contents of Hearing Request 

Under § 405.1811(a) and (b) (for an 

intermediary hearing) and 

§ 405.1835(a)(2) and § 405.1841(a)(1) 

(for a Board hearing), a hearing request 

must be in writing and must identify the 

specific aspects of the intermediary 

determination with which the provider 

is dissatisfied, explain its dissatisfaction 

with each matter at issue, and submit 

supporting documentation for its 

position on each matter at issue. We 

believe it is necessary and appropriate 

to revise the regulations governing the 

content of provider hearing requests for 

three reasons. 

First, we believe the extensive 

litigation of various issues of Board 

jurisdiction is attributable in part to the 

absence of regulations requiring an early 

and continuing focus on whether the 

Board has jurisdiction over each matter 

at issue. Although we address this 

problem in detail with respect to our 

proposed addition of new § 405.1814 

(‘‘Intermediary hearing officer 

jurisdiction’’) and § 405.1840 (‘‘Board 

jurisdiction’’), as discussed in sections 

II.F. and II.J. of this preamble, we 

believe it is necessary to propose 

corresponding changes to other 

regulations. In order to facilitate an 

early focus by the parties and the 

reviewing entity on the jurisdictional 

requirements for a hearing before the 

Board or intermediary, we believe it is 

reasonable to require the original 

hearing request to include a 

demonstration (through argument and 

supporting documentation) that the 

provider satisfies the jurisdictional 

requirements for the hearing request. 

Accordingly, we propose in 

§ 405.1811(b)(1) and § 405.1835(b)(1) to 

require the provider to demonstrate in 

its hearing request (through argument 

and supporting documentation) that it 

meets the requirements for a hearing 

before the intermediary or the Board, 

respectively. We believe this proposal 

will facilitate the reviewing entity’s 

capacity to meet its continuing 

responsibility to ensure its own 

jurisdiction throughout each stage of the 

proceedings (see § 405.1814 and 

§ 405.1840). 

Second, we also believe it is necessary 

to revise the current requirement that a 

provider identify, explain, and 

document its dissatisfaction with 

particular aspects of the intermediary 

determination. In order to facilitate the 

reviewing entity’s capacity to determine 

compliance with our proposed selfdisallowance rules, we believe it is 

reasonable to require the hearing request 

to include a description of the nature 

and amount of each self-disallowed item 

and the reimbursement sought for each 

cost. In proposed § 405.1811(b)(2) and 

§ 405.1835(b)(2), we would include this 

requirement in addition to the current 

requirement that the provider identify 

and explain its dissatisfaction with each 

matter at issue in the hearing request. 

We also note that the proposed 

requirement of detailed information 

about each specific self-disallowed item 

should help the intermediary conduct 

any audits of self-disallowed items that 

may be required under proposed 

§ 405.1803(d), as discussed in section 

II.D.2. of this preamble.

Third, we further believe it is 

necessary to clarify the current 

requirement that a hearing request 

include supporting documentary 

evidence. We are aware of various cases 

in which the need to determine Board 

jurisdiction over a specific matter at 

issue has been hampered by the absence 

of the NPR(s) relevant to the appeal or 

by confusion about whether the NPR at 

issue was the initial NPR or a revised 

NPR issued after reopening (see 

§ 405.1885 and § 405.1889). Because 

appropriate findings of fact and 

conclusions of law about Board 

jurisdiction (see proposed § 405.1840) 

cannot be reached without this 

information, proposed § 405.1811(b)(3) 

and § 405.1835(b)(3) would require the 

hearing request to include each 

intermediary determination at issue in 

the appeal. (We note that if the 

intermediary determination under 

appeal is a revised NPR, the provider 

would be required to include the 

pertinent reopening notice and the 

initial NPR so that an appropriate 

determination can be made as to 

whether a specific matter at issue is 

within the scope of the revised NPR.) 

For similar reasons, the hearing request 

would have to include all documents 

necessary to determine compliance with 

the self-disallowance rules proposed in 

§ 405.1811 and § 405.1835. However, 

the hearing request would no longer 

need to include documents necessary to 

35724 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

support the merits of the provider’s 

position on a specific reimbursement 

matter because the reviewing entity 

must make a preliminary finding of its 

jurisdiction over each matter at issue 

before it considers the merits of a 

particular issue (see proposed 

§ 405.1814 and proposed § 405.1840). 

5. Adding Issues to Original Hearing 

Request (§ 405.1811(c) and 

§ 405.1835(c)) 

Under current § 405.1811(c) and 

§ 405.1841(a)(1), a provider may add a 

specific matter at issue to the original 

request for a hearing before the 

intermediary or the Board, respectively, 

anytime before the commencement of a 

hearing. Under our longstanding 

interpretation of these provisions, a 

provider’s right to add issues is limited 

to a single provider appeal before the 

Board or the intermediary, and does not 

apply to a group appeal to the Board 

under section 1878(b) of the Act and 

§ 405.1837. Also, a provider’s right to 

add issues is contingent on an original 

hearing request that meets all 

jurisdictional requirements for a Board 

or intermediary hearing, along with 

satisfaction of applicable jurisdictional 

requirements after any issues are added 

to the original request. Moreover, if a 

provider’s original hearing request is an 

appeal from a revised NPR issued after 

a reopening (see § 405.1885 and 

§ 405.1889), the provider’s right to add 

issues is limited to those specific 

matters that are within the scope of the 

reopening and revised NPR. 

We believe it is necessary to revise the 

regulations governing the addition of 

issues to an original hearing request. At 

the time the current provisions were 

adopted in September, 1974, there was 

no case backlog at the Board; thus, it 

was reasonable to expect that hearings 

would be conducted expeditiously, 

thereby leaving a relatively short period 

for the addition of new issues. As the 

case backlog and the period before the 

hearing have increased, however, it has 

become apparent that permitting the 

addition of issues at any time before the 

hearing is untenable. Because Board 

hearings often are not conducted until 

several years after the original hearing 

request, the period for adding issues far 

exceeds our original expectations. 

Moreover, we believe the availability of 

such a long period for adding issues has 

become a major obstacle to the Board’s 

efforts to reduce (or at least minimize 

additions to) its case backlog.

In order to resolve (or at least 

mitigate) the problems posed by a 

virtually open-ended period for adding 

issues, we believe it is appropriate to 

propose a period that reconciles a 

provider’s potential need to supplement 

its original hearing request with the 

imperative of enhancing the Board’s 

capacity to reduce the case backlog. We 

believe a 60-day period, commencing 

with the expiration of the applicable 

180-day period for submitting the 

original hearing request under proposed 

§ 405.1811(a)(3) and § 405.1835(a)(3), 

would strike an appropriate balance 

between these two concerns. On the one 

hand, a 60-day period should foreclose 

additions to the case backlog that are 

attributable to the addition of new 

issues to appeals that may remain 

pending before the Board for several 

years. 

However, a 60-day period would 

afford providers an adequate 

opportunity to appeal specific issues 

that were overlooked in the original 

hearing request. A provider has at least 

5 months after the end of a fiscal period 

to file a cost report (see § 413.24(f)(2)), 

after which the intermediary has 12 

months to issue a timely NPR (see 

§ 405.1835(c)). Of course, the provider 

then has 180 days in which to analyze 

the NPR and prepare and submit any 

hearing request. Our proposal to allow 

60 more days for the addition of new 

issues to the original hearing request 

gives the provider ample time to appeal 

any matter overlooked in the original 

hearing request. 

We believe a proposed 60-day 

limitation on the period for adding 

issues to an original hearing request is 

consistent with section 1878 of the Act. 

This provision does not address 

whether or how long a provider may 

add issues to a pending request for a 

Board hearing. Nonetheless, we 

considered whether our proposal is 

consistent with section 1878(d) of the 

Act, which gives the Board the power to 

affirm, modify, or reverse the 

intermediary determination under 

appeal, and to make any other revisions 

on matters covered by the cost report 

regardless of whether such matters were 

considered by the intermediary in 

making the final determination of 

Medicare reimbursement. 

We believe that, in cases where the 

Board has jurisdiction under section 

1878(a) of the Act, section 1878(d) does 

not foreclose our proposed 60-day 

period for adding issues. We recognize 

that, to the extent the Board has 

jurisdiction under section 1878(a) over 

a single provider appeal from an initial 

NPR, the third sentence of section 

1878(d) confers on the Board the power 

to affirm, modify, or reverse the 

intermediary determination, and to 

make any other revisions on matters 

covered by the cost report regardless of 

whether such matters were considered 

by the intermediary in making the final 

determination. However, we interpret 

this provision to address only the 

Board’s powers over a jurisdictionally 

proper appeal under section 1878(a)—

not whether or how long after filing the 

appeal a provider may add issues to 

such an appeal. Indeed, the third 

sentence of section 1878(d) of the Act is 

reflected in § 405.1869 (‘‘Scope of 

Board’s decisionmaking authority’’), 

instead of § 405.1841(a)(1) (‘‘Time, 

place, form, and content or request for 

Board hearing’’), since the original 

Board regulations. 

Given our interpretation that section 

1878 of the Act does not address 

whether or how long after filing an 

appeal a provider may add issues to the 

appeal, we believe our proposal to allow 

a 60-day period to add issues to such an 

appeal is an appropriate exercise of the 

Secretary’s general rulemaking authority 

under sections 1102 and 1871 of the 

Act. As discussed previously, we 

believe this proposal strikes a 

reasonable accommodation between a 

provider’s potential need to ensure the 

completeness of its original hearing 

request and the necessity of improving 

the Board’s ability to reduce the case 

backlog. 

Moreover, we believe the Board’s 

powers under section 1878(d) of the Act 

do not apply to appeals from a revised 

NPR after a reopening. Instead, the 

Board’s powers under section 1878(d) 

apply, for purposes of a single provider 

appeal, only to an appeal from an initial 

NPR that satisfies the jurisdictional 

requirements of section 1878(a) of the 

Act. We believe the Board’s jurisdiction 

over post-reopening appeals is based on 

§ 405.1889 of the reopening regulations, 

and not on section 1878(a) of the Act. 

See French Hosp. Med. Ctr. v. Shalala,

89 F.3d 1411, 1416–20 (9th Cir. 1996); 

HCA Health Servs. of Oklahoma, Inc. v. 

Shalala, 27 F.3d 614, 617–19 (D.C. Cir. 

1994). Because section 1878(d) of the 

Act does not pertain to post-reopening 

appeals premised on § 405.1889 of the 

reopening regulations, our proposal to 

limit the period for adding issues to a 

post-reopening appeal does not seem 

inconsistent with the statute.

For the foregoing reasons, we propose 

to revise § 405.1811(c) and § 405.1835(c) 

to authorize a provider to add issues to 

an original request for an intermediary 

or Board hearing within 60 days after 

the expiration of the applicable 180-day 

period for making the original request. 

(See section II.V. of this preamble for a 

discussion of our proposal for the time 

in which to add issues following a 

reopening by an intermediary of a 

determination currently on appeal to the 

Board (proposed § 405.1885(c)(1)). Any 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35725

request to add issues would have to be 

in writing, satisfy the jurisdictional 

dissatisfaction requirements under 

proposed § 405.1811 (a)(1) or 

§ 405.1835(a)(1), and meet the 

requirements governing the contents of 

a hearing request under proposed of 

§ 405.1811(b) or § 405.1835(b), as 

applicable. Also, the provider would 

have to establish both that the original 

hearing request meets all applicable 

jurisdictional requirements, and that the 

original request combined with the 

matters identified for addition to that 

request satisfy the applicable amount in 

controversy requirement under 

proposed of § 405.1811(a)(2) or 

§ 405.1835(a)(2). Moreover, we would 

continue our longstanding policies of 

prohibiting the addition of issues to a 

group appeal before the Board, as 

discussed in section II.H. of this 

preamble), and limiting the addition of 

issues in a single provider appeal from 

a revised NPR to those specific issues 

that are within the scope of the 

reopening and revised NPR. 

We considered the alternative of 

eliminating altogether the opportunity 

to add issues to a single provider 

appeal. This alternative would be likely 

to enhance further the Board’s capacity 

to reduce the case backlog. We believe, 

however, that a provider may 

reasonably need additional time to 

ensure its original hearing request is 

complete, and, if necessary, request 

addition of issues to the original 

request. 

E. Provider Requests for Good Cause 

Extension of Time Period for Requesting 

Hearing (§ 405.1813 and § 405.1836) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Provider Request for Extension’’ at the 

beginning of your comments.] 

Current § 405.1813 and § 405.1841(b) 

authorize the intermediary hearing 

officer(s) and the Board, respectively, to 

extend ‘‘for good cause shown’’ the 180-

day period for requesting a hearing. 

Under these regulations, a provider 

must file any request for a good cause 

extension within 3 years after the date 

of the original notice of intermediary 

determination.

We believe it is necessary to revise the 

regulations governing good cause 

extension requests for two reasons. 

First, there is a split among the Federal 

circuit courts of appeals on the 

threshold question of our authority to 

authorize the Board to extend the 180-

day period for hearing requests under 

section 1878(a)(3) of the Act. The courts 

of appeals for the Eighth and Eleventh 

Circuits have held that the good cause 

extension request provisions in 

§ 405.1841(b) are invalid because they 

are inconsistent with section 1878(a)(3) 

of the Act. (St. Joseph’s Hosp. of Kansas 

City v. Heckler, 786 F.2d 848 (8th Cir. 

1986); Alacare Home Health Services, 

Inc. v. Sullivan, 891 F.2d 850 (11th Cir. 

1990).) By contrast, the Ninth Circuit 

has upheld our authority to authorize 

good cause extension requests before the 

Board, and concluded that a final 

agency decision on such a request is 

subject to judicial review under the 

Administrative Procedure Act, 5 U.S.C. 

706(2)(A). Western Med. Enters., Inc. v. 

Heckler, 783 F.2d 1376 (9th Cir. 1986). 

Other courts, without addressing the 

issue of whether there is authority to 

allow an extension for good cause, have 

found that the courts do not have 

jurisdiction to review a finding by the 

Board or the Administrator that good 

cause did not exist in a particular case. 

See Lenox Hill Hosp. v. Shalala, 131 F. 

Supp. 2d 136 (D.D.C. 2000) and cases 

cited therein. 

Second, we believe the case backlog at 

the Board also necessitates revision of 

the good cause extension request 

regulations. When the Board finds good 

cause to extend the 180-day period for 

requesting a hearing, another case is 

added to the backlog. Also, the lengthy 

3-year period for requesting a good 

cause extension makes increases in the 

backlog more likely. 

We propose to continue to authorize 

good cause extensions of the 180-day 

period for requesting a hearing. 

However, we also are proposing 

revisions to these regulations in 

response to the case law and the case 

backlog before the Board. 

The split of authority among the 

Federal circuit courts of appeals 

regarding our authority to provide for 

good cause extensions led us to consider 

the alternative of eliminating these 

regulations altogether. Our proposal, to 

retain and revise the regulations instead, 

is based on several considerations. As 

discussed previously in the context of 

the regulations for adding issues to an 

original hearing request in section 

II.D.5. of this preamble, we believe the 

Board’s jurisdiction over post-reopening 

appeals is based on § 405.1889 of the 

reopening regulations, and not on 

section 1878(a) of the Act. See HCA 

Health Servs. of Oklahoma, Inc. v. 

Shalala, 27 F.3d 614, 617–19 (D.C. Cir. 

1994); French Hosp. Med. Ctr. v. 

Shalala, 89 F.3d 1411, 1416–20 (9th Cir. 

1996). Thus, we see no statutory 

impediment to retaining good cause 

extension regulations for requests for a 

Board hearing based on a reopening and 

revised NPR. 

As for a Board hearing request based 

on an initial NPR and section 1878(a) of 

the Act, we see some merit to both sides 

of the split of judicial authority as to our 

authority to provide for good cause 

extensions in such cases. Although our 

proposal to retain and revise these 

regulations is based primarily on policy 

considerations, we note that adoption of 

this proposal may result in additional 

court decisions and lead to a definitive 

resolution of whether the regulations are 

consistent with section 1878(a)(3) of the 

Act. 

We believe it is appropriate to afford 

providers an additional period to submit 

hearing requests in limited 

circumstances. Specifically, in cases 

where a provider establishes it could 

not reasonably have been expected to 

submit a hearing request within the 180-

day period due to extraordinary 

circumstances beyond its control (for 

example, natural or other catastrophe, 

fire, or strike), we believe it appropriate 

to authorize the Board and the 

intermediary hearing officer(s), as 

applicable, to extend the appeals period 

provided that the provider’s good cause 

extension request is received by the 

Board within a reasonable time after the 

expiration of the 180-day period (but in 

no circumstances more than three years 

after the date of the intermediary 

determination). We emphasize that the 

circumstances justifying additional time 

to submit a hearing request truly would 

have to be extraordinary. Where such 

extraordinary circumstances would 

exist, what would be considered a 

‘‘reasonable’’ additional period would 

depend on the particular situation and 

would be set according to the discretion 

of the Board or the intermediary hearing 

officer(s). The outer limit of three years 

after the date of the intermediary 

determination would be consistent with 

the time for seeking a reopening under 

proposed § 405.1885(b).

For the foregoing reasons, we propose 

to revise § 405.1813 and add a new 

§ 405.1836 to authorize the intermediary 

hearing officer(s) and the Board, 

respectively, to extend the 180-day 

period for requesting an intermediary or 

Board hearing, as applicable. Proposed 

§ 405.1813 and § 405.1836 include three 

principal revisions to the current 

regulations. First, our proposal to 

continue to authorize good cause 

extensions is limited under paragraph(a) 

of § 405.1813 and § 405.1836 to provider 

extension requests received by the 

Board or the intermediary hearing 

officer(s), as applicable, within a 

reasonable time after the expiration of 

the applicable 180-day period 

prescribed in proposed § 405.1811(a)(3) 

or § 405.1835(a)(3), as applicable. 

Second, while the current regulations 

do not include specific guidance for 

35726 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

determining whether there is good cause 

for granting an extension request, we 

propose to add criteria for this purpose. 

Proposed § 405.1813(b) and 

§ 405.1836(b) would provide that the 

intermediary hearing officer(s) and the 

Board, respectively, may find good 

cause to extend the time limit only if the 

provider demonstrates it could not 

reasonably have been expected to 

submit a hearing request within the 180-

day period due to extraordinary 

circumstances beyond its control such 

as natural or other catastrophe, fire, or 

strike. Furthermore, § 405.1813(c)(1) 

and § 405.1836(c)(1) would prohibit the 

pertinent reviewing entity from granting 

a good cause extension request if the 

provider relies on a change (whether 

based on a court decision or otherwise) 

in the law, regulations, CMS Rulings, 

general CMS instructions, or CMS 

administrative ruling or policy as the 

basis for the extension request. We 

believe these proposals are a necessary 

and appropriate means to ensure that an 

additional period for submission of a 

hearing request is available only if the 

provider was prevented from submitting 

an appeal due to extraordinary 

circumstances beyond its control. We 

also believe the proposed prohibition of 

good cause extensions based on a 

change in the law will prevent the 

provider from appealing improperly a 

new issue—one it had not intended 

previously to appeal—after expiration of 

the 180-day period. 

Third, we also are proposing revisions 

to delineate the consequences of a 

reviewing entity’s decision on a 

provider’s good cause extension request. 

A decision by an intermediary hearing 

officer(s) or the Board, to grant or deny 

a request for an extension for good 

cause, would be subject to review by a 

CMS reviewing official or the 

Administrator, as applicable. Because 

we view decisions on whether to grant 

an extension for good cause to be 

analogous to decisions on whether to 

reopen a previous determination or 

decision, we would state that a decision 

by the Board or the Administrator to not 

grant an extension for good cause would 

not be subject to judicial review under 

proposed § 405.1877(a)(3) or (a)(4). 

In order to facilitate any further 

administrative review of such a 

decision, proposed § 405.1813(d) and 

§ 405.1836(d) requires the pertinent 

reviewing entity to provide written 

notice of its decision to grant or deny a 

good cause extension request. Such 

notice must include an explanation of 

the reasons for the decision by the 

Board or the intermediary hearing 

officer(s), as applicable, and the facts 

underlying the decision. 

Also, § 405.1813(e) and § 405.1836(e) 

includes proposals about the availability 

and timing of any review of such 

decisions. Specifically, § 405.1813(e) 

and § 405.1836(e) would provide that a 

decision by the Board or the 

intermediary hearing officer(s), as 

applicable, denying good cause and 

dismissing the appeal, is final and 

binding on the parties unless the 

decision is reviewed by the 

Administrator or a CMS hearing officer, 

respectively. Such a dismissal decision 

would be immediately reviewable. 

Proposed §§ 405.1813 and 405.1836(e) 

would further provide that if the Board 

or intermediary hearing officer(s) grants 

a good cause extension request, the 

decision would be non-final and not 

subject to immediate administrative or 

judicial review. Any non-final decision 

on an extension request would be 

reviewable solely during the course of 

review by the Administrator or a CMS 

hearing official, as applicable, of one of 

the decisions enumerated in 

§ 405.1875(a)(2) or § 405.1834, 

respectively. We believe these proposals 

are an appropriate way to avoid 

piecemeal litigation, and are consistent 

with settled principles regarding the 

timing of administrative review. 

Finally, proposed § 405.1836(e) would 

state that a determination by the Board 

or the Administrator that the provider 

did or did not demonstrate good cause 

for extending the time to request a 

hearing, is not subject to judicial review. 

We do not believe that it is necessary to 

propose a provision for § 405.1814 as 

that section would not provide for any 

judicial review of any decision by an 

intermediary hearing officer(s) or a CMS 

reviewing official. 

F. Intermediary Hearing Officer 

Jurisdiction (§ 405.1814)

We propose to add a new § 405.1814 

to impose certain requirements on 

intermediary hearing officers regarding 

making jurisdictional findings and to 

provide certain information on matters 

that are excluded from an intermediary 

hearing officer’s jurisdiction. Proposed 

§ 405.1814 would be similar to proposed 

§ 405.1840, pertaining to Board 

jurisdiction, discussed below. 

In proposed § 405.1814, we would 

require the intermediary hearing officer 

to make a preliminary determination of 

the scope of his or her jurisdiction, if 

any, over the matters at issue in the 

appeal, and notify the parties of his or 

her specific jurisdictional findings, 

before conducting any of the following 

proceedings: determining his or her 

authority to decide a legal question 

relevant to a matter at issue (see 

§ 405.1829; permitting discovery (see 

§ 405.1821); and conducting a hearing 

(see § 405.1819). Our proposal is 

designed to ensure the hearing officer’s 

and the parties’ focus on jurisdictional 

issues, for the purposes of making 

accurate decisions and to avoid 

committing needless time and resources 

in cases where jurisdiction is not 

present. 

In issuing his or her decision, the 

intermediary hearing officer would be 

required to include a final jurisdictional 

finding for each specific matter at issue 

in the appeal. If the hearing officer 

determines that he or she lacks 

jurisdiction over every specific matter at 

issue in the appeal, he or she would 

issue a jurisdictional dismissal decision 

under § 405.1814(c)(2). Final 

jurisdictional findings and jurisdictional 

dismissal decisions by the hearing 

officer(s) would be subject to the CMS 

reviewing official procedure. Where a 

hearing officer does not dismiss an 

entire appeal, but instead finds that he 

or she lacks jurisdiction over a 

particular issue or issues, (or, 

conversely, finds that he or she has 

jurisdiction over a particular issue or 

issues) the hearing officer’s 

jurisdictional ruling on such issue or 

issues would not be immediately 

reviewable, but rather would be 

reviewable upon the hearing officer’s 

issuance of a hearing decision. Our 

proposal is intended to promote an 

efficient hearing and appeals process by 

not allowing for bifurcated appeals. 

Finally, proposed § 405.1814 would 

specify that certain matters at issue are 

removed from the jurisdiction of the 

intermediary hearing officer, such as a 

finding in an intermediary 

determination that no payment be made 

by Medicare for costs incurred for items 

and services furnished to an individual 

because those items and services are 

excluded from coverage under section 

1862 of the Act and our regulations. 

(Such a finding may be reviewed only 

in accordance with the applicable 

provisions of section 1869 of the Act, 

and of subpart G or H of part 405 of our 

regulations, pertaining to coverage 

appeals.) Another example of matters 

removed from the intermediary hearing 

officer’s jurisdiction includes certain 

matters affecting payments to hospitals 

under the prospective payment system, 

as provided in § 405.1804. 

G. CMS Reviewing Official Procedure 

(§ 405.1834) 

Currently, our procedures for CMS 

review of intermediary hearings appear 

at § 2917 of the PRM. The procedures at 

§ 2917 of the PRM were issued in 

response to the court’s decision in St. 

Louis University v. Blue Cross Hospital 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35727

Service, 537 F.2d 283 (8th Cir. 1976). 

Because we believe that these 

procedures are of sufficient importance 

to warrant inclusion in the regulations, 

we propose to add a new § 405.1834 for 

that purpose. 

In § 405.1834(a), we would specify the 

current rule that a provider, and only a 

provider, has the right to a review by the 

Administrator (acting by delegation to a 

CMS reviewing official) of an 

intermediary hearing officer decision. 

Unlike CMS Administrator review of a 

Board decision conducted in accordance 

with § 405.1875, if a provider requests 

review of an intermediary hearing 

officer decision and otherwise meets the 

requirements for review, the request 

must be granted. We also propose that 

the Administrator, through the CMS 

reviewing official, may take own motion 

review of an intermediary hearing 

officer decision, regardless of whether 

the decision is favorable to the provider. 

(Own motion review, as used here for 

review of intermediary hearing officer 

decisions and other reviewable actions, 

and also for Administrator review of 

Board decisions and other reviewable 

actions, is any review undertaken by the 

Administrator on his or her own 

initiative, including the situation where 

the Administrator takes review 

following a suggestion by a CMS 

component or other entity that review is 

appropriate.) We believe the rationale of 

St. Louis University is applicable to the 

situation where the intermediary 

hearing officer’s decision is unfavorable 

to the provider as well as to the 

situation where the decision is favorable 

to the provider.

In proposed § 405.1834(b) we would 

specify the types of decisions that are 

and are not immediately reviewable. A 

final decision by the intermediary 

hearing officer denying a provider’s 

good cause extension request; a final 

jurisdictional dismissal decision by the 

intermediary hearing officer (including 

any determination denying a provider’s 

good cause extension request), and a 

final intermediary hearing decision 

would be immediately reviewable. Nonfinal actions taken by the intermediary 

hearing officer generally would not be 

immediately reviewable. For example, 

and in accordance with proposed 

§ 405.1814(d), if an intermediary 

hearing officer finds that he or she has 

jurisdiction over one or more issues but 

not over another issue(s), the provider 

may seek review by a CMS reviewing 

official of the issue(s) for which the 

intermediary hearing officer found no 

jurisdiction, but may not seek such 

review until the intermediary hearing 

officer has issued an intermediary 

hearing decision. We would provide an 

exception, in the case of certain 

discovery or disclosure rulings, to the 

proposed provision that non-final 

actions may not be immediately 

appealed. We would allow immediate 

review, upon request of the provider or 

upon own motion of the Administrator, 

of any discovery or disclosure order 

(including an order made at the hearing) 

for which an objection based on 

privilege or other protection from 

disclosure was made. We would do so 

because any harm that may be caused by 

a discovery or disclosure order might 

not be rectified by a reversal of the order 

by the CMS reviewing official in the 

context of review of the intermediary 

hearing officer’s final decision. An 

immediate review would be at the 

discretion of the CMS reviewing official. 

That is, although, a provider has the 

right to CMS reviewing official review 

(as discussed previously), whether the 

CMS reviewing official takes immediate 

review, where an objection based on 

privilege or other protection from 

disclosure was made, is discretionary. 

We discuss our proposal for immediate 

review of certain discovery and 

disclosure rulings further in section 

II.N., of this preamble. 

In proposed § 405.1834(c) and (d), we 

would specify the time for a provider to 

request review, or for the CMS 

Administrator (through a CMS 

reviewing official) to take own motion 

review, of an intermediary hearing 

officer decision. In order for a provider 

request for review to be timely, the 

request must be received by CMS’s 

Office of Hearings no later than 60 days 

after the date on which the provider 

received the intermediary hearing 

officer decision. The address of the 

Office of Hearings is: Suite CMS L, 2520 

Lord Baltimore Drive, Baltimore, MD 

21244–2670.

For provider requests for CMS 

reviewing official review of a discovery 

or disclosure order for which an 

objection based on privilege or other 

protection from disclosure was made, 

we would require the request to be 

made within 5 business days after the 

day the objection was made so as not to 

unduly disrupt the hearing process. 

If the CMS Administrator wishes to 

take own motion review, through a CMS 

reviewing official, of an intermediary 

hearing officer decision, the CMS 

reviewing official must notify the 

parties and the intermediary of his or 

her intention to take own motion review 

no later than 60 days after the date the 

Office of the Hearings received the 

intermediary hearing officer decision. It 

is not necessary for the CMS reviewing 

official to issue his or her decision 

within such 60-day period. 

In proposed § 405.1834(e), we would 

specify the procedures to be followed by 

a CMS reviewing official in reviewing 

an intermediary hearing officer’s 

decision. A CMS reviewing official 

would be required to follow all 

applicable statutes, regulations and 

CMS Rulings, and would be required to 

afford great weight to other interpretive 

and procedural rules (such as those 

contained in the Provider 

Reimbursement Manual) and general 

statements of policy. The review by a 

CMS reviewing official ordinarily would 

be limited to the record of the 

proceedings before the intermediary 

hearing officer, but the CMS reviewing 

official could consider extra-record 

evidence if he or she determined under 

§ 405.1823 that the evidence was 

improperly excluded from the record. 

The CMS reviewing official ordinarily 

would issue a decision based on the 

written record, but could decide to hold 

an oral hearing if he or she determines 

that an oral hearing is necessary. Upon 

completion of his or her review, the 

CMS reviewing official would issue a 

decision that affirms, reverses, modifies, 

or remands the intermediary hearing 

officer decision and would mail a copy 

of such decision to each party, to the 

intermediary and to CMS’s Office of 

Hearings. 

Proposed § 405.1834(f) would state 

the effect of a decision or a remand. 

Consistent with current procedures in 

section 2917 of the PRM, § 405.1834(f) 

would state that a CMS reviewing 

official decision that affirms, modifies 

or reverses the intermediary hearing 

officer’s decision is final and binding on 

each party and on the intermediary, 

unless reopened, and is not subject to 

further appeal. A CMS reviewing official 

remand decision would not be a final 

decision and would have the effect of 

vacating the intermediary hearing 

officer’s decision. A CMS reviewing 

official remand would require the 

intermediary hearing officer to take the 

actions specified in the remand order 

and to issue a new intermediary hearing 

officer decision. 

H. Group Appeals (§ 405.1837) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Group Appeals’’ at the beginning of 

your comments.] 

Section 1878(b) of the Act and 

§ 405.1837(a) of the regulations 

authorize a group of providers to appeal 

to the Board. (We note that group 

appeals are available for Board hearings, 

but not for intermediary hearings.) Each 

provider in a group appeal must satisfy 

individually the requirements for a 

single provider appeal under section 

35728 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

1878(a) of the Act and § 405.1835, 

except for the $10,000 amount in 

controversy requirement. Also, a group 

appeal is limited to those cases that 

involve a single common question of 

fact or interpretation of law, regulations, 

or CMS Rulings, in which the amount 

in controversy is, in the aggregate, 

$50,000 or more. Furthermore, the last 

sentence of section 1878(f)(1) of the Act, 

and § 405.1837(b), require providers 

under common ownership or control to 

bring any appeal, involving a legal or 

factual issue common to such providers 

and involving $50,000 or more in 

controversy in the aggregate, as a group 

appeal rather than allowing them to 

bring separate, single provider appeals. 

We believe it is necessary to revise the 

group appeal provisions of § 405.1837 

and propose appropriate revisions in 

order to ensure conformity with other 

proposed changes to the regulations. For 

example, we believe it is appropriate to 

propose revisions to § 405.1837 to 

conform the group appeal regulations to 

our proposed changes to the single 

provider appeal provisions of 

§ 405.1835. 

Another reason to propose revisions 

to § 405.1837 is that it is appropriate to 

clarify and update that regulation to 

reflect longstanding group appeal 

procedures. For example, our 

longstanding policy is that a group 

appeal may start as a Board hearing 

request for a group of providers or as a 

single provider appeal that later 

becomes a group appeal. Other 

longstanding policies limit each group 

appeal to only one common legal or 

factual issue, and prohibit the addition 

of new issues to a group appeal. We 

believe it is necessary and appropriate 

to propose revisions to § 405.1837 to 

reflect and update such longstanding 

policies for group appeals.

Under our proposal, § 405.1837(a) 

would be revised to clarify that each 

provider in a group appeal must satisfy 

individually the requirements for a 

single provider appeal (except for the 

$10,000 amount in controversy 

requirement). (We address the $50,000 

amount in controversy requirement for 

group appeals separately for § 405.1839 

in section II. I., for this preamble.) 

Proposed § 405.1837(a)(1) would 

clarify that each provider must establish 

its dissatisfaction with Medicare 

payment for a specific item in 

accordance with our proposed revisions 

to § 405.1835(a)(1). This proposal would 

further clarify that each provider must 

demonstrate, for each disputed matter at 

issue, that it satisfied the 180-day 

deadline for appeal under our proposed 

revisions to § 405.1835(a)(3). 

In proposed § 405.1837(a)(2), we 

would clarify our longstanding 

interpretation that a group appeal must 

be limited to one legal or factual issue 

that is common to each provider in the 

group. Section 1878(b) of the Act 

authorizes a group appeal if ‘‘the 

matters in controversy involve a 

common question of fact or 

interpretation of law or regulation.’’ We 

interpret the foregoing reference to ‘‘a’’

common legal or factual issue to mean 

that ‘‘the matters in controversy’’ (that 

is, the separate matters appealed by the 

different providers in the group) in one 

group appeal may involve only one 

common question of law or fact. 

Similarly, we construe the reference in 

the last sentence of section 1878(f)(1) of 

the Act to ‘‘an issue common to such 

providers’’ to mean that commonly 

owned or operated providers must file 

a separate group appeal for each 

common legal or factual question. 

Besides comporting with the statutory 

language, our interpretation has always 

been reflected in § 405.1837 and in our 

general policies and procedures for 

group appeals. (See, for example, 

Board’s ‘‘Group Appeal Instructions’’

(July 1997)), reprinted in [CCH] 

Medicare and Medicaid Guide 7700.30 

(each group appeal must ‘‘contain one 

issue’’; providers ‘‘may not combine 

different issues’’). See also PRRB 

Instructions, Part 1, Section B.I.d 

(March 2002). 

We also propose to revise 

§ 405.1837(b) to clarify the distinction 

between mandatory and optional uses of 

group appeal procedures, and to specify 

the different ways these two types of 

group appeals may be initiated. 

Proposed § 405.1837(b)(1) would 

require, consistent with section 

1878(f)(1) of the Act and current 

§ 405.1837(b), that any appeal brought 

by two or more commonly owned or 

controlled providers, involving a legal 

or factual question that is common to 

these providers, and involving $50,000 

or more in controversy in the aggregate, 

be brought as a group appeal. Proposed 

§ 405.1837(b)(2) would provide, 

consistent with section 1878(b) of the 

Act and current § 405.1837(a), that two 

or more providers not under common 

ownership or control may (but are not 

required to) bring a group appeal of a 

specific matter at issue that involves a 

common legal or factual question. 

In proposed § 405.1837(b)(3), we 

would specify the different ways 

mandatory and optional group appeals 

may be initiated. We would require a 

provider subject to the mandatory group 

appeal requirements of section 

1878(f)(1) of the Act and proposed 

§ 405.1837(b)(1) to request, either alone 

or with other commonly owned or 

operated providers, a group appeal. We 

believe it is reasonable to require 

commonly owned or operated providers 

to initiate an appeal with a request for 

a hearing as a group because their 

common ownership or control should 

enable these providers to identify issues 

raising a common legal or factual 

question. By contrast, providers not 

under common ownership or control do 

not have a ready means to identify 

common issues with other providers. 

Thus, proposed § 405.1837(b)(3) would 

give providers not under common 

ownership or control an election 

between submitting at the outset a group 

hearing request, or starting with a single 

provider appeal and transferring 

common issues to a group appeal at a 

later time. 

Also, we propose to add a new 

§ 405.1837(c), which would specify the 

requirements for the contents of a 

request for a group appeal. Under 

proposed § 405.1837(c)(1), a group 

appeal request would have to be 

submitted in writing to the Board and 

include a demonstration that the request 

satisfies all requirements for a group 

appeal under proposed § 405.1837(a). 

Proposed § 405.1837(c)(2) would require 

each provider in the group appeal to 

demonstrate in its initial request its 

dissatisfaction with Medicare payment 

for each disputed item and compliance 

with the applicable 180-day appeal 

deadline, and to include a copy of each 

intermediary or Secretary determination 

under appeal and any other 

documentary evidence the provider 

believes necessary to demonstrate the 

dissatisfaction and timely filing 

requirements.

Under proposed § 405.1837(c)(3), the 

initial request for a group appeal must 

include a precise description of the one 

question of fact or interpretation of law, 

regulations, or CMS Rulings that is 

common to the particular matters at 

issue in the group appeal. 

In proposed § 405.1837(c)(4), we 

would authorize an election as to when 

the group may demonstrate compliance 

with the $50,000 amount in controversy 

requirement. Our longstanding policy is 

to permit providers to submit a group 

appeal request before the group is fully 

formed. This policy reflects our 

recognition that it may not be possible 

for the group to satisfy the $50,000 

amount in controversy requirement 

until other providers receive their 

respective NPRs and request a hearing 

as part of the same group appeal. 

Accordingly, proposed § 405.1837(c)(4) 

would give the group an election 

between establishing at the outset that 

all hearing requirements (for each 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35729

provider and for the whole group) are 

met, or showing initially that all 

requirements are satisfied except for the 

$50,000 amount in controversy 

requirement. Proposed paragraph (c)(4) 

would further require that the group 

appeal request include a statement 

representing that the providers believe 

the hearing request is jurisdictionally 

complete (and hence the Board can 

proceed to make jurisdictional findings) 

or the request is incomplete (and thus 

the Board should defer making 

jurisdictional findings). 

We advance corresponding provisions 

in proposed new § 405.1837(d) 

regarding the Board’s preliminary 

response to group appeal hearing 

requests. Apart from taking any 

ministerial steps deemed necessary 

upon receipt of such a request, the 

Board’s principal response would be 

determined by the providers’

representation under proposed 

§ 405.1837(c)(4) as to whether the 

hearing request satisfies all 

requirements for a group appeal. For 

hearing requests described as 

jurisdictionally complete by the group, 

the Board would be required under 

§ 405.1837(d) to make jurisdictional 

findings in accordance with new 

proposed § 405.1840 (see section II.J. of 

this preamble) before conducting any 

further proceedings. If the hearing 

request is described as jurisdictionally 

incomplete by the group, the Board 

would defer the requisite jurisdictional 

findings (and hence any further 

proceedings in the appeal) until the 

group represents that the hearing 

request is complete. 

Proposed § 405.1837(e) clarifies the 

regulations to reflect and update our 

longstanding policies regarding the 

processing of group appeals pending 

full formation of the group and issuance 

of a Board decision. Proposed 

§ 405.1837(e)(1) would authorize the 

filing of a group appeal hearing request 

before each member of the group has 

been identified or complied with the 

dissatisfaction and timely filing 

requirements, or before the group has 

satisfied the $50,000 amount in 

controversy requirement. Proceedings 

before the Board in any such partially 

formed group appeal would be 

determined by the remainder of 

proposed § 405.1837(e). 

Under proposed § 405.1837(e)(2), the 

Board would not make the jurisdictional 

findings required under new proposed 

§ 405.1840 until the group notifies the 

Board in writing that the group appeal 

is jurisdictionally complete. Proposed 

§ 405.1837 (e)(3) authorizes the Board to 

take further steps necessary for 

consideration of the appeal only to the 

extent it finds jurisdiction over the 

specific matters at issue. In the event the 

Board finds jurisdiction before the 

group is fully formed, however, 

§ 405.1837 (e)(3) would require the 

Board to make additional and updated 

jurisdictional findings after any ensuing 

changes in the composition of the 

group. 

Proposed § 405.1837(e)(4) would 

authorize a provider to request from the 

Board permission to join a group appeal 

anytime before the Board issues one of 

the final decisions enumerated in 

proposed § 405.1875(a)(2). The Board 

would be required to grant any such 

request that is unopposed by any group 

member and received timely by the 

Board, and otherwise complies with 

§ 405.1837. If the Board grants a request, 

the newly added provider would be 

bound by the Board’s actions and 

decision in the appeal. If the Board 

denies the request, the provider could 

still submit a separate appeal on the 

same issue. The applicable 180-day 

period for filing a separate appeal (and 

the 60-day period for adding issues to 

any separate single provider appeal) 

would be suspended during the period 

from submission of the original hearing 

request through the Board’s denial of 

the provider’s request to join the group 

appeal. That is, following the Board’s 

denial, the provider would have the 

same number of days to file an appeal 

or add issues that it had at the time it 

submitted the request to join the group 

appeal. We believe proposed of 

§ 405.1837(e) reasonably reflects and 

updates our longstanding policies 

regarding group appeal processing 

pending full formation of the group and 

issuance of a Board decision. 

In proposed § 405.1837(f), we would 

clarify that the specific matters at issue 

in a group appeal must be limited to one 

legal or factual question common to 

each provider in the group.

I. Amount in Controversy (§ 405.1839) 

Section 405.1839 sets forth the 

requirements for determining the 

minimum amounts in controversy for 

intermediary and Board hearings 

($1,000 for an intermediary hearing and 

$10,000 for a Board hearing.) We believe 

that certain aspects of the regulations 

need clarification to ensure the proper 

interpretation of the requirements by 

providers. 

To clarify the method for determining 

the amount in controversy, we propose 

a series of minor revisions to § 405.1839. 

For both individual and group appeals, 

we would specify in proposed 

§ 405.1839(a) and (b), respectively, that 

the amount in controversy is 

determined based only on those 

particular adjustments that the provider 

has challenged before the Board or the 

intermediary and includes the 

combined total of all issues raised by 

the provider that arise within the same 

cost year. Thus, a provider may 

aggregate issues within a cost year to 

meet the threshold amount. However, 

we would specify in proposed 

§ 405.1839(a)(1) that a single provider 

may not aggregate issues across more 

than one cost year even if the issues 

involve the same payment adjustments 

being appealed in other cost years. We 

believe this proposed provision reflects 

the intent of section 1878(a)(1)(A)(i) of 

the Act, which specifies that a provider 

may obtain a Board hearing if it is 

dissatisfied with the intermediary’s 

determination of the amount due the 

provider for the period covered by the 

provider’s cost report. Therefore, a 

provider would have to meet the 

amount in controversy requirement for 

each cost year being appealed. In 

contrast, in proposed § 405.1839(b)(1) 

we would allow providers to aggregate 

issues across more than one cost year for 

purposes of meeting the amount in 

controversy requirement for group 

appeals. In Cleveland Memorial 

Hospital, Inc. v. Califano, 594 F.2d 993 

(4th Cir. 1979), and White Memorial 

Medical Center v. Schweiker, 640 F.2d 

1126 (9th Cir. 1981), the courts held that 

Congress’s intent in enacting section 

1878 of the Act was to permit providers 

in a group appeal to aggregate issues 

over more than one cost year, if 

necessary, to meet the amount in 

controversy requirement. We do not 

necessarily agree with the courts’ view 

of Congressional intent and we note that 

the cases were decided prior to the 

Supreme Court’s decision in Chevron 

U.S.A., Inc. v. Natural Resources 

Defense Council, Inc., 467 U.S. 837 

(1984), which held that courts must 

defer to an agency’s interpretation of a 

statute that the agency is charged with 

administering, if the agency’s 

interpretation is a permissible one. 

However, because we have conformed 

our policy to the courts’ decisions since 

their issuance, and because no 

significant problems have been 

encountered with that policy, we see no 

reason to propose departing from it at 

the present time. 

J. Board Jurisdiction (§ 405.1840) 

We propose to add a new § 405.1840, 

which would be similar to proposed 

new § 405.1814, pertaining to 

intermediary hearing officer 

jurisdiction, as discussed at section II.F. 

of this preamble. In addition, we note 

that current § 405.1873 provides that the 

Board decides questions relating to its 

35730 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

jurisdiction and that the Board may not 

review intermediary determinations 

denying payment because the item or 

service is excluded from coverage under 

section 1862 of the Act. Because we 

believe it appropriate to state within 

§ 405.1840 that the Board does not have 

jurisdiction to review an intermediary 

determination that an item or service is 

excluded under section 1862 of the Act, 

we propose to delete § 405.1873 and 

consolidate its provisions into new 

§ 405.1840. 

K. Expediting Judicial Review 

(§ 405.1842)

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Expediting Judicial Review’’ at the 

beginning of your comments.] 

After the Board began conducting 

hearings under section 1878 of the Act, 

it became evident that in cases where 

providers challenged an intermediary’s 

determination based on objections to the 

validity of the law, regulations or CMS 

rulings, a hearing before the Board 

would not resolve the dispute. Because 

these cases did not raise factual issues 

and because, under section 1878(e) of 

the Act, the Board is bound by the law 

and regulations, the Board was obliged 

to decide these cases against the 

provider. Although the provider could 

then seek judicial review in these cases 

(that is, file a complaint in a Federal 

district court), the provider effectively 

was required to participate in a futile 

hearing before the Board as a 

prerequisite to obtaining Federal court 

jurisdiction. 

To remedy this situation, we 

published a proposed rule on February 

14, 1980 (45 FR 9953) that sought to 

provide the Board with the authority to 

permit a provider to avoid the delay of 

a futile Board hearing and immediately 

seek to challenge the CMS policy in 

court. Before a final rule was published, 

section 1878(f)(1) of the Act was 

amended by section 955 of the Omnibus 

Reconciliation Act of 1980 (Pub. L. 96–

499) to allow providers to seek 

immediately judicial review of any 

action of the fiscal intermediary 

involving a question of the statute or 

regulations whenever the Board 

determined that it was without 

authority to decide the issue. Under the 

revised provisions of section 1878(f)(1), 

a provider can request that the Board 

make a determination of its authority to 

decide the issue before it. If the Board 

determines that it has jurisdiction over 

the issue but does not have the authority 

to decide the issue, the provider may 

obtain expedited judicial review. The 

legislative history indicates that the 

intent of revising section 1878(f)(1) was 

to eliminate undue delays resulting 

from the requirement that providers 

pursue time-consuming and 

unproductive administrative reviews 

before they could obtain judicial review 

of a Board determination. (H.R. Rep. No. 

96–1167, at 394 (1980)). 

Over the years, there has been some 

confusion about the types of cases to 

which expedited judicial review 

applies. For example, in appeals before 

the Board, providers have contended 

not only that intermediary audit 

adjustments are improper, but that the 

statute or regulation under which the 

intermediaries’ review was conducted is 

invalid. The providers have argued that, 

because an aspect of the appeal 

concerns a challenge to a statute or 

regulation, expedited judicial review 

should be granted so that the legal 

matter can be contested in court while 

the audit adjustments are 

simultaneously being contested before 

the Board. The Board has denied these 

requests for expedited judicial review 

because it found that the issues before 

it involved the accuracy of the cost 

adjustments. In the Board’s view, a 

provider’s assertion that the audit 

procedure was in violation of a statute 

or regulation was not an issue for 

purposes of the judicial review 

provision but constituted a legal 

argument in support of the provider’s 

position that the adjustments had to be 

reversed. The Board found that in the 

types of cases mentioned above, a 

hearing before it would not necessarily 

be futile because it often could decide 

the case and grant the relief sought by 

the provider based on other arguments 

presented. 

We agree with the Board’s position 

that, in situations in which a provider 

asserts that audit adjustments are 

improper and also argues that a statute, 

regulation, or CMS Ruling bearing on 

those adjustments is invalid, a Board 

hearing should be held before the matter 

proceeds to court. We believe that 

although an assertion that a statute, 

regulation, or Ruling is invalid is a 

matter that the Board cannot decide, the 

Board should accept the case and rule 

on those other issues relating to the 

same adjustments over which it has 

jurisdiction and does have authority to 

decide. Only in those cases in which the 

Board determines it has jurisdiction but 

does not have the authority to decide 

any of the issues raised with respect to 

a particular item by the provider, should 

it grant expedited judicial review as to 

those issues. 

Accordingly, we propose the 

following revisions to § 405.1842. 

To reflect more accurately the subject 

matter of this section, we would change 

the title from ‘‘Expediting Board 

Proceedings’’ to ‘‘Expedited Judicial 

Review’’. We would change all 

references in this section to reflect the 

revised title, including using the 

acronym ‘‘EJR.’’ We recognize that to 

say that the Board grants or does not 

grant expedited judicial review is not 

strictly accurate. The Board actually 

grants or denies the opportunity to seek 

expedited judicial review, because only 

the court can grant review by taking 

jurisdiction over the case. However, we 

believe ‘‘expedited judicial review’’ and 

‘‘EJR’’ are suitable and commonly used 

terms to refer to proceedings at the 

administrative level.

In § 405.1842(a), we would clarify that 

providers may seek expedited judicial 

review when the Board decides, because 

it is bound by a relevant statute, 

regulation, or CMS Ruling, that, 

although it has jurisdiction, it does not 

have the authority to decide the issue. 

We consider jurisdiction to be a 

necessary prerequisite of the Board’s 

ability to issue an EJR Decision. We 

would also clarify that the 

Administrator may review the Board’s 

determination of whether it has 

jurisdiction over the matter(s) at issue, 

but may not review the Board’s 

determination of whether it has the 

authority to decide such matter(s). 

In proposed § 405.1842(b), we would 

set forth an overview of the EJR process. 

We believe that an overview would be 

helpful given the complexity of the 

process. In § 405.1842(b)(1), we would 

emphasize that a Board finding that it 

has jurisdiction over the specific matter 

at issue is a prerequisite for its 

determination of its authority to decide 

the legal question, and for the ensuing 

stages of the EJR process. Section 

1878(f)(1) of the Act states that a 

provider may file a request for EJR ‘‘[i]f 

[such] provider of services may obtain a 

hearing under subsection (a) [which sets 

forth the jurisdictional requirements for 

obtaining a Board hearing].’’ In 

§ 405.1842(b)(2) we would state that the 

EJR procedures may be initiated in two 

ways. First, a provider or group of 

providers may request the Board to 

grant EJR, or, second, the Board may 

consider on its own motion whether to 

grant EJR. We would also state in 

paragraph (b)(2), consistent with the 

requirement that a Board finding of 

jurisdiction is a prerequisite of both the 

provider’s ability to obtain EJR and the 

Board’s authority to issue an EJR 

Decision, that the 30-day time limit 

specified in section 1878(f)(1) of the Act 

for the Board to act on a provider’s 

complete request does not begin to run 

until the Board has found jurisdiction 

on the specific matter at issue. 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35731

In § 405.1842(c), we would clarify the 

procedures for own motion 

consideration by the Board of whether 

to grant EJR. Upon finding that it has 

jurisdiction on a specific matter at issue, 

the Board would be authorized to 

consider, on its own motion, whether it 

lacks the authority to decide a legal 

question relevant to the matter at issue. 

The Board would be required to send 

written notice to each of the parties to 

the appeal so that they may respond 

with evidence or argument in favor of or 

against granting EJR. 

In proposed § 405.1842(d) we would 

specify the procedures for provider 

requests for EJR, including the required 

contents of such requests. 

In proposed § 405.1842(e), we specify 

the procedures for the Board to reply to 

provider requests for EJR and how we 

calculate the 30-day timeframe for 

issuing an EJR Decision following a 

provider request. In paragraph (e)(1) we 

would state that if the Board finds that 

it has jurisdiction over a matter for 

which the provider has requested EJR, 

the Board is then required to consider 

whether it lacks the authority to decide 

the legal question that is relevant to a 

matter. The Board would be required to 

issue an EJR decision for a matter no 

later than 30 days after the date of the 

Board’s notice to the provider that the 

provider’s request is complete. The 

condition that the 30-day timeframe 

does not begin to run until the Board 

has received a ‘‘complete’’ request from 

the provider is found in section 

1878(f)(1) of the Act (a provider request 

for EJR shall be ‘‘accompanied by such 

documents and materials as the Board 

shall require’’ and ‘‘the Board shall 

render [an EJR Decision] within thirty 

days after the Board receives the request 

and such accompanying documents and 

materials.’’)

In proposed § 405.1842(e)(2) we 

would define a ‘‘complete provider 

request’’ as one that includes all of the 

information and documents found 

necessary for the Board to issue an EJR 

decision. In proposed § 405.1842(e)(3), 

we would specify what the Board must 

do when it has received a complete 

provider request or an incomplete 

provider request. Where the Board has 

received a complete provider request, it 

would be required to issue an EJR 

decision within 30 days of its receipt of 

the complete provider request. We 

would also specify that if the Board 

does not issue a timely EJR Decision 

(that is, no later than 30 days after the 

date of the notice issued under 

§ 405.1842(e)(3)(i)), the provider has a 

right to file a complaint in Federal 

district court in order to obtain judicial 

review over the matter(s) at issue (see 

also proposed (§ 405.1842(g)(4)). Where 

the Board has received an incomplete 

provider request the Board would be 

required to issue a written notice to the 

provider describing the further 

information the Board requires. 

In proposed § 405.1842(f), we would 

specify the criteria for the Board to 

apply for purposes of granting or 

denying EJR. If the Board has taken own 

motion consideration of whether to 

grant EJR, or if the provider has 

requested EJR, the Board would be 

required to grant EJR if it determines 

that it has jurisdiction over the specific 

matter at issue, and lacks the authority 

to decide the matter. The Board would 

be required to deny EJR if it determined 

it lacked jurisdiction over the specific 

matter at issue, or if it determined that 

it had the authority to decide the 

specific matter at issue, or if it did not 

have sufficient information to determine 

whether it had jurisdiction over, or had 

the authority to decide, the specific 

matter at issue. Subject to § 405.1842(h), 

the Board would be required to issue an 

EJR Decision (either granting or denying 

EJR) in any case in which it notified the 

provider that it was taking own motion 

consideration of whether to grant EJR 

under § 405.1842(c), or in which it 

notified the provider that its request for 

EJR was complete under § 405.1842(e). 

Under proposed § 405.1842(h) 

(discussed below), the Board would not 

be required or permitted to render an 

EJR Decision if the provider filed a 

lawsuit on the specific matter at issue 

for the same cost year at issue. The 

Board would also not be required or 

permitted to issue an EJR Decision 

following a provider request for EJR if 

the provider did not submit a complete 

request and did not perfect the request 

after being given the opportunity to do 

so under § 405.1842(e). 

In proposed § 405.1842(g)(1), we 

would provide that, in accordance with 

proposed § 405.1875(a)(2)(iii), the 

Administrator may review, on his or her 

own motion, or at the request of a party, 

the Board’s EJR Decision. The 

Administrator’s review would be 

limited to the question of whether there 

is Board jurisdiction over the specific 

matter at issue. The Administrator 

would not be permitted to review the 

Board’s determination of its authority to 

decide the legal question. To account for 

the possibility that a Board decision 

may grant EJR and the Administrator 

may find that the Board did not have 

jurisdiction over one or more of the 

specific matters at issue, the proposed 

rule would state that a Board decision 

granting or denying EJR is inoperative 

during the 60-day period for review by 

the Administrator. Proposed paragraph 

(g)(1) also would specify that a final 

Board EJR Decision under paragraph (f) 

of this section, and a final Administrator 

decision affirming, modifying, reversing 

or remanding a Board EJR Decision 

under § 405.1875(a)(2) and (e), may be 

reopened in accordance with 

§§ 405.1885 through 405.1889. Under 

proposed § 405.1842(g)(3), where a 

Board decision denies EJR for a specific 

matter at issue solely because it 

determines that it did not have 

jurisdiction over the matter, and the 

Administrator reverses the Board on the 

jurisdictional finding, and the Board 

determines on remand that it lacks the 

legal authority to decide the question, 

the provider would be able to file a 

complaint seeking EJR. 

Proposed § 405.1842(h) would set 

forth the effect of final EJR Decisions by 

the Board and the Administrator, and 

the effect of lawsuits, on the Board’s 

ability to conduct further proceedings 

on the appeal. Paragraph (h)(1) would 

provide that if the final decision of the 

Board grants EJR, the Board would be 

precluded from conducting any further 

proceedings on the legal question. The 

Board would be required to dismiss the 

specific matter at issue from the appeal 

unless the Board could fully decide the 

matter without a final resolution of the 

legal question for which EJR was 

granted. The Board would be required 

also to dismiss the entire appeal if there 

were no other matters at issue that were 

within the Board’s jurisdiction and 

could be fully decided by the Board.

Proposed § 405.1842(h)(2) would 

specify the effect that a Board or 

Administrator decision denying EJR 

would have on the Board’s ability to 

conduct further proceedings on the 

appeal. First, if the final decision of the 

Board were to deny EJR solely on the 

basis that the Board determines that it 

has the authority to decide the legal 

question relevant to the specific matter 

at issue, the Board would be required to 

conduct further proceedings on the 

specific legal question and issue a 

decision on the matter at issue in 

accordance with this subpart. (An 

exception to this rule would exist where 

the provider(s) files a lawsuit pertaining 

to the legal question; in that situation, 

the Board would be precluded from 

conducting any further proceedings on 

the legal question or the matter at issue 

before the lawsuit is finally resolved.) 

Second, if the Board or the 

Administrator were to deny EJR on the 

sole, or additional, basis that the Board 

lacks jurisdiction over the specific 

matter at issue, the Board would be 

required, as applicable, to dismiss the 

specific matter at issue from the appeal, 

or to dismiss the appeal entirely if there 

35732 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

were no other matters at issue that were 

within the Board’s jurisdiction and 

could be fully decided by the Board. 

Example 1: Suppose a provider, after it 

received a revised NPR, filed an appeal 

and raised three issues, and sought EJR 

on the first issue. If the Board decided 

that the issue for which the provider 

sought EJR was not within the scope of 

the revised NPR, it would be required to 

dismiss that issue. If the Board found 

that the second and third issues were 

within the scope of the revised NPR, the 

appeal would continue (assuming there 

were no other jurisdictional problems 

with those issues), and the provider 

would not be able to seek Administrator 

(or judicial) review of the first issue 

until the Board issued a final decision 

on all the issues. (See proposed 

§ 405.1840(d).) If, following a final 

decision by the Board on all the issues, 

the Administrator were to take review of 

the first issue and find that the Board 

did have jurisdiction, the Administrator 

would remand for the Board to 

determine whether it had the authority 

to decide the issue. If the Board were to 

decide on remand that it did not have 

the authority to decide the issue, then 

the Board would grant EJR on the issue. 

Example 2: Same as above except that 

the Administrator declines review or 

issues a timely decision affirming the 

Board’s decision that it did not have 

jurisdiction on the first issue. In this 

case, the provider could appeal the 

Board’s decision (if the Administrator 

declined review) or the Administrator’s 

decision to court, and if the court were 

to reverse the Board’s or Administrator’s 

decision, the Administrator would 

remand the matter to the Board for a 

finding of whether the Board had the 

authority to decide the legal issue. 

Proposed § 405.1842(h)(3) would 

specify the effect that a provider lawsuit 

would have on the Board’s ability to 

conduct further proceeding on the legal 

matter at issue. In general, if a provider 

files a lawsuit on the same legal issue 

for the same cost year that is currently 

pending before the Board—that is, the 

provider goes into court without waiting 

for a final administrative decision on 

EJR, we would seek to have the lawsuit 

dismissed, and we would prohibit the 

Board from conducting further 

proceedings on that issue until the 

lawsuit is resolved. 

L. Parties to a Board Hearing 

(§ 405.1843) 

Section 405.1843(a) of the regulations 

states that the parties to a Board hearing 

include the intermediary, the provider, 

and any related organization of the 

provider. This section also provides that 

CMS may be a party to the hearing only 

when it acts directly as an intermediary. 

Section 405.1843(b) provides that 

neither the Secretary nor CMS may be 

made a party to the hearing (except 

when CMS acts as an intermediary). 

With the disbandment of CMS’s Office 

of Direct Reimbursement (formerly 

known as the Division of Direct 

Reimbursement), CMS no longer acts 

directly as an intermediary. Therefore, 

we propose to delete the obsolete 

references in § 405.1843(a) and (b) that 

provide that CMS may be a party to a 

hearing when it serves as an 

intermediary.

Although we are not a party to a 

Board hearing, our policies, actions and 

decisions are frequently central to a 

provider’s reimbursement dispute 

before the Board. Moreover, in certain 

types of appeals, it is CMS, rather than 

the fiscal intermediary, that has made 

the determination being appealed by the 

provider. 

Because our policies, actions and 

decisions may be at the center of many 

Board disputes, we believe the 

regulations should provide a 

mechanism by which CMS may be 

included in the hearings process, 

without having formal party status. 

Accordingly, we propose to add a new 

§ 405.1843(c) to authorize 

intermediaries to designate a 

representative from CMS, who may be 

an attorney, to defend the 

intermediary’s position in proceedings 

before the Board. We are modeling this 

portion of the regulations on the 

provisions authorizing the U.S. 

Department of Justice to allow an 

attorney (outside of the Department of 

Justice) to appear on its behalf in certain 

situations (see 28 U.S.C. 515). There 

may also be cases before the Board that 

have major policy implications that 

CMS would like to address without 

being designated as the representative of 

the intermediary. In these cases, 

proposed new § 405.1843(d)) would 

permit CMS to make written and timely 

filed amicus curiae submissions for the 

Board’s consideration. 

M. Quorum Requirements (§ 405.1845) 

Section 405.1845(d) provides that a 

quorum is required for the rendering of 

Board decisions. Three Board members, 

at least one of whom is representative of 

providers of services, constitute a 

quorum. With the provider’s approval, 

the Board Chairman may designate one 

or more Board members to conduct a 

hearing and prepare a recommended 

decision for adjudication by a quorum 

when a sufficient number of Board 

members are available. 

As mentioned previously, the Board 

has an enormous case backlog. 

Approximately 10,000 hearing requests 

currently are awaiting disposition by the 

Board. In order to expedite the 

resolution of these cases and reduce this 

backlog, we propose several revisions to 

the quorum requirements under 

§ 405.1845(d). First, because the 

presence of a quorum of Board members 

is not required at a hearing, we propose 

to clarify that more than one hearing 

may be held simultaneously. Under this 

proposed revision, the Board Chairman 

could designate one Board member to 

conduct a hearing. Under our proposal, 

it would not be necessary for the Board 

Chairman to obtain the approval of the 

provider or the intermediary before he 

or she could assign less than a quorum 

to conduct a hearing. We believe that 

the rights of the parties are not 

prejudiced by not requiring the Board to 

obtain the permission of the parties to 

have less than a quorum present at the 

hearing because no hearing decision 

would be rendered without the 

participation of a quorum of the Board 

members. 

Second, we propose to eliminate the 

requirement that a recommended 

decision be prepared when less than a 

quorum has conducted the hearing. We 

believe that the preparation of a 

recommended decision is a timeconsuming process that may be 

eliminated without affecting the fairness 

of the proceeding. A Board member who 

was not present at a hearing thus would 

be able to review the written record of 

the hearing and make a decision based 

upon that review. This proposed change 

is consistent with the Administrative 

Procedure Act, which provides at 5 

U.S.C. 557(b) that an administrative 

officer charged with the decision 

making need not personally hear the 

testimony, but may rely instead on the 

written record.

We also propose that the Board may 

offer the parties the option to have the 

Board decide the case based on all the 

written evidence submitted by the 

parties. The parties would have to agree 

to waive their rights to an oral hearing 

as a condition for holding a ‘‘hearing on 

the written record.’’

N. Board Proceedings Prior to Hearing; 

Discovery in Board and Intermediary 

Hearing Officer Proceedings (§ 405.1853 

and § 405.1821) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Board Proceedings Prior To Hearing’’

at the beginning of your comments.] 

We propose to make several revisions 

to § 405.1853. Proposed § 405.1853(a) 

would specify the present requirement 

that, prior to any Board hearing, the 

intermediary and provider must attempt 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35733

to resolve legal and factual issues, and 

following such attempt must send to the 

Board joint or separate written 

stipulations setting forth the specific 

issues that remain for Board resolution. 

We would remove the requirement that 

the intermediary ensure that all 

documentary evidence in support of 

each party’s position is in the record. 

The intermediary does not have the 

capability or the responsibility for 

ensuring that all documentary evidence 

in support of the provider’s position is 

made part of the record. We would 

continue the present requirement that 

the intermediary be required to place in 

the record a copy of all evidence that it 

considered in making its determination, 

and would add, that where the 

determination under appeal is a 

Secretary determination, the 

intermediary would be responsible for 

placing in the record all evidence 

considered by CMS in making the 

Secretary determination. 

In proposed § 405.1853(b), we would 

address the timeframes for submitting 

position papers. Currently, § 405.1853(a) 

requires the provider and the 

intermediary to submit position papers, 

identifying issues that have been 

resolved between the intermediary and 

the provider and those that remain for 

Board resolution, to the Board no later 

than 60 days after the provider’s hearing 

request. In many instances, the 60-day 

timeframe for submitting position 

papers has proved to be not a realistic 

or workable timeframe. We would 

remove the reference to the 60-day 

timeframe and instead provide in 

proposed § 405.1853(b) that the Board 

will set the deadlines for submitting 

position papers in each case as 

appropriate, and that the Board would 

have the authority to extend the 

deadline for good cause shown. 

Additionally, we propose requiring 

that each position paper set forth the 

relevant facts and arguments concerning 

the Board’s jurisdiction over each 

remaining matter at issue in the appeal, 

and that any supporting exhibits must 

accompany the position paper. These 

proposed requirements are intended to 

facilitate the Board’s ability to make 

preliminary findings as to whether it 

has jurisdiction with respect to each 

specific matter at issue (see proposed 

§ 405.1840(a)). All accompanying 

exhibits must be submitted in a form to 

be decided by the Board. Finally, 

proposed § 405.1840(b) would require 

that exhibits regarding the merits of the 

provider’s appeal are to be submitted 

pursuant to the schedule set by the 

Board. 

Proposed § 405.1853(c) and (d), would 

set forth requirements relating to 

‘‘initial’’ and ‘‘further’’ status 

conferences. We would clarify that the 

Board may conduct status conferences 

for a wide variety of purposes, 

borrowing the criteria set forth in 42 

CFR § 1005.6(b). Proposed § 405.1853(e) 

would make changes in discovery 

procedures for Board proceedings, and 

we would propose similar changes to 

§ 405.1821 for proceedings before an 

intermediary hearing officer(s). In 

developing our proposals, we have 

attempted to balance competing 

considerations. On the one hand, and in 

accordance with the view that discovery 

generally is not available in record 

review cases before the courts, we 

believe that discovery should be 

limited, especially for non-parties. In 

this regard, we note that under our 

proposed revisions to § 405.1853(a) we 

would require that the intermediary, or 

CMS, as applicable, place in the record 

a copy of all evidence that the 

intermediary or CMS considered in 

making its determination, thus lessening 

any need for extra-record discovery. We 

are also concerned with the effect that 

broad discovery procedures may have 

on the Board’s ability to schedule and 

hold hearings in an efficient manner. On 

the other hand, we recognize that 

reasonable discovery procedures can 

enhance the fairness of proceedings and 

the accuracy of decisions. Additionally, 

there may be circumstances where an 

entity that is not a party to a Board 

hearing, for example, CMS, is the only 

entity able to respond to provider 

discovery requests. A provider that 

seeks to obtain discovery materials from 

its servicing intermediary before a Board 

hearing is sometimes unable to do so 

because only a non-party has the 

requested information. We do not 

believe that it is fair to providers to 

deny them access to discovery material 

in these types of situations, and would 

therefore include non-parties within the 

scope of our proposed procedures.

Proposed § 405.1853(e)(1), and 

proposed § 405.1821(b)(1) would specify 

the basic requirements for discovery, 

including the requirement that the 

matter sought to be discovered must be 

relevant to the specific subject matter of 

the Board or intermediary hearing. 

Proposed § 405.1853(e)(2) would 

specify that the method of discovery 

permitted would generally be limited to 

reasonable requests for the production 

of documents for inspection and 

copying, and a reasonable number of 

interrogatories, with depositions 

permitted in limited circumstances. A 

party would not be permitted to take an 

oral or written deposition of another 

party or a non-party, unless the 

proposed deponent agrees to the 

deposition, or the Board finds that the 

proposed deposition is necessary and 

appropriate under Federal Rules of Civil 

Procedure 26 and 32. (Under proposed 

paragraph (e)(1), the applicable 

provisions of the Federal Rules of Civil 

Procedure and Rules 401 (relevant 

evidence) and 501 (privileges) of the 

Federal Rules of Evidence would be 

used as guidance for all discovery 

permitted under this section or by Board 

order.) We would specifically state in 

paragraph (e)(2) that requests for 

admission, or any other form of 

discovery (other than requests for 

production of documents, 

interrogatories and depositions) are not 

permitted. Proposed § 405.1821(b)(2) 

would be similar, except that we would 

not permit depositions in proceedings 

before an intermediary hearing 

officer(s), as we do not believe the 

potential expense and inconvenience of 

a deposition is warranted given the 

limited amount in controversy in 

intermediary hearing officer hearings. 

In § 405.1853(e)(3), we would revise 

the time limits for requesting discovery. 

Section 405.1853(b) provides that the 

Board must allow all timely requests for 

prehearing discovery, that is, requests 

made before the beginning of a hearing. 

Under this rule, a party is within its 

rights to file a discovery request as late 

as 1 day before a scheduled hearing, and 

the Board is bound to honor the request. 

We do not believe this is a reasonable 

requirement, especially in light of the 

current backlog of cases at the Board, 

and the substantial length of time 

between filing an appeal and the Board 

determination. We propose that a 

party’s discovery request would be 

timely if the date of receipt of such a 

request by another party or non-party, as 

applicable, is no later than 90 days 

before the scheduled starting date of the 

Board hearing. A party would not be 

permitted to conduct discovery any later 

than 45 days before the scheduled 

starting date of the Board hearing. We 

would further provide that, upon 

request and upon a showing of good 

cause, the Board may extend the time 

for making a discovery request or may 

extend the time for performing 

discovery. Before ruling on an extension 

request, the Board would be required to 

give the other parties to the appeal (and 

any non-party subject to a discovery 

request) a reasonable period to respond 

to the extension request. The Board 

would be permitted to extend the time 

for requesting discovery or for 

conducting discovery only if the 

requesting party establishes that it was 

not dilatory or otherwise at fault in not 

meeting the original discovery deadline. 

35734 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

If the Board grants the extension 

request, it would be required to impose 

a new deadline and, if necessary, 

reschedule the hearing date so that all 

discovery ends no later than 45 days 

before the hearing. Proposed 

§ 405.1821(a) would be similar for 

proceedings before an intermediary 

hearing officer(s).

In § 405.1853(e)(4) and § 405.1821(c), 

we propose to specify the rights of nonparties with respect to discovery 

requests. A non-party would have the 

same rights as a party in responding to 

a discovery request. These rights would 

include, but would not be limited to, the 

right to select and use any attorney or 

other representative, and to submit 

discovery responses, objections, 

motions, or other pertinent materials to 

the Board. 

In § 405.1853(e)(5) and 

§ 405.1821(c)(3), we propose a specific 

procedure for motions to compel and for 

protective orders. In order to conserve 

Board resources and promote an 

efficient hearing process, each party 

would be required to make a good faith 

effort to resolve or narrow any discovery 

dispute, including a dispute with a nonparty. Any motion to compel discovery 

and any motion for a protective order, 

and any response thereto, would have to 

include a self-sworn declaration 

describing the movant’s or respondent’s 

efforts to resolve or narrow the 

discovery dispute. 

In § 405.1853(e)(6), and in 

§ 405.1821(d)(2), we would include a 

general rule, and an exception thereto, 

for the reviewability of Board or 

intermediary hearing officer(s) orders on 

discovery. Our general rule would be 

that any discovery or disclosure ruling 

issued by the hearing officer(s) or the 

Board is non-final and not subject to 

immediate review by the Administrator. 

Rather, such a ruling could be reviewed 

solely during the course of 

Administrator review of one of the 

Board decisions specified as final, or 

deemed to be final by the Administrator, 

under § 405.1875(a)(2), or of judicial 

review of a final agency decision as 

described in § 405.1877(a) and (c)(3), as 

applicable. However, we also propose 

that where the Board or hearing 

officer(s) authorize discovery, or compel 

disclosure, of a matter for which a party 

or non-party made an objection based 

on privilege, or some other protection 

from disclosure, that portion of the 

discovery ruling would be reviewable 

immediately by the Administrator. If a 

party or non-party were required, over 

its objection, to disclose privileged 

materials or comply with an unduly 

burdensome request, the damage could 

not be undone by a reversal of the order 

by the Administrator in the context of 

review of the Board’s or hearing 

officer(s)’ final decision. For 

Administrator review of an order to be 

meaningful, it has to be available 

immediately to the party or non-party. 

We would provide for an automatic stay 

where the party or non-party, as 

applicable notifies the Board or 

intermediary hearing officer(s) of its 

intention to seek immediate review. The 

duration of the stay would be limited to 

no more than 15 days in the case of 

Board proceedings and to no more than 

10 days in the case of intermediary 

hearing officer(s) proceedings. Under 

proposed §§ 405.1875(c)(1) and 

405.1834(c)(3), a request for a review 

would have to be made within 5 

business days after the party or nonparty received notice of the Board’s or 

intermediary hearing officer’s ruling. If 

the Administrator grants a request for 

review or takes own motion review 

before the expiration of the stay, the stay 

would continue until the Administrator 

or CMS reviewing official renders a 

written decision, but if the 

Administrator does not grant or take 

review within the time allotted for the 

stay, the stay is lifted and the Board’s or 

hearing officer(s)’ ruling stands. We 

believe our proposal strikes an 

appropriate balance between the need to 

maintain the orderly flow of cases 

before the Board or the hearing officers, 

and a party’s right to assert privilege or 

to be free from unduly burdensome 

requests. 

O. Subpoenas (§ 405.1857) 

We propose to revise and clarify our 

procedures for the Board issuance of 

subpoenas. In addition to specifying in 

some detail the procedures for 

requesting subpoenas and the required 

contents for subpoenas, we would make 

the subpoena process similar to the 

discovery process under § 405.1853 in 

several respects. 

In proposed § 405.1857(a), we would 

impose time limits for requesting 

subpoenas that are similar to those we 

propose for discovery requests and 

orders. For subpoenas requested for 

purposes of discovery, a party would be 

allowed to request a subpoena no later 

than 90 days before the scheduled 

starting date of the Board hearing, and 

for subpoenas requested for purposes of 

an oral hearing, a request would have to 

be made at least 45 days before the 

scheduled starting date of the Board 

hearing. In addition, for purposes of a 

discovery subpoena or a hearing 

subpoena, the Board would not be 

allowed to issue a subpoena any later 

than 75 days, or 30 days, respectively, 

before the scheduled starting date of the 

Board hearing. For good cause, the 

Board would be allowed to extend the 

time for requesting a subpoena or for 

issuing a subpoena, provided that it 

gave certain procedural protections 

(including allowing any party, and CMS 

or any other non-party affected by the 

subpoena, the opportunity to comment 

on the proposed extension).

Consistent with our view that 

discovery should be available in 

appropriate circumstances from nonparties, we propose to specifically state 

in § 405.1857(a) that a subpoena may be 

issued to a non-party. Section 205(d) of 

the Act authorizes the Secretary to issue 

subpoenas requiring attendance, 

testimony, and production of evidence 

relevant to the matter under 

investigation. Section 1878(e) of the Act 

provides that the provisions of section 

205(d) apply to the Board to the same 

extent that they apply to the Secretary. 

Section 405.1857 currently provides 

that the Board, either upon its own 

motion or upon the request of a party, 

may issue subpoenas ‘‘when reasonably 

necessary for the full presentation of a 

case.’’ There may be instances when the 

Board or a requesting party believes that 

a non-party should be subpoenaed to 

produce documents or testify. This 

section does not specify whether the 

Board’s subpoena authority extends to 

non-parties. Therefore, we propose to 

revise § 405.1857 to clarify that a nonparty may be subpoenaed by the Board. 

We believe this proposed revision is 

justifiable in view of the authority to 

issue subpoenas granted to the Board 

under section 1878(e) of the Act. We 

believe a non-party’s rights would be 

adequately protected by extending to it 

the same rights a party would have in 

responding to a subpoena or subpoena 

request, see proposed § 405.1857(c)(3), 

and by allowing it to seek immediate 

Administrator review of a Board 

subpoena in some circumstances, (see 

proposed § 405.1857(d)(2)). 

In proposed § 405.1857(d), we would 

propose the same general rule and 

exception for Administrator review of 

Board subpoenas that we propose for 

Administrator review of Board 

discovery rulings. That is, the rule 

would be that any subpoena issued by 

the Board would be non-final and not 

subject to immediate review, with the 

exception that immediate Administrator 

review could be had where the Board 

issued a subpoena for a matter for which 

a party or non-party made an objection 

based on privilege, or some other 

protection from disclosure. Our general 

rule and exception for Administrator 

review of Board subpoenas are based on 

the same considerations that led us to 

propose our general rule and exception 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35735

for Administrator review of Board 

discovery rulings. 

In proposed § 405.1857(e), we would 

specify that only the Administrator has 

the authority to seek enforcement of a 

Board subpoena. We believe that 

because the Administrator is the 

Secretary’s designee as the final 

administrative authority for appeals 

under section 1878 of the Act and has 

the authority to review Board issuances 

of subpoenas, it is appropriate that the 

Administrator have sole authority to 

seek enforcement of a subpoena. For 

example, it would make little sense to 

have the Board seek enforcement of a 

subpoena that the Administrator in the 

course of its review authority later 

determines to have been issued 

erroneously. Our proposal would also 

avoid any potential conflict whereby the 

Board would attempt to enforce a 

subpoena directed at CMS or the 

Secretary that the Administrator 

believes should not be enforced. 

P. Record of Administrative Proceedings 

(§ 405.1865) 

Section 405.1865, entitled ‘‘Record of 

Board Hearing,’’ requires that a 

‘‘complete’’ record be made of the 

proceedings at the hearing before the 

Board, but does not specify what 

materials are to be made part of the 

record. It also does not explain how 

evidence or other material that is 

excluded by the Board or the 

Administrator is to be segregated in 

order to ensure that such excluded 

material is not inadvertently considered 

by the Administrator or by a court. We 

propose to amend § 405.1865 to address 

with specificity the required contents of 

the record on appeal and to explain how 

excluded material is to be treated. We 

would change the title from ‘‘Record of 

Board Hearing’’ to ‘‘Record of 

administrative proceedings,’’ to reflect 

that the recordkeeping requirements 

apply not only to Board review but to 

Administrator review as well. New 

paragraph (a) would specify that all 

evidence, argument and any other 

tangible material (admissible or 

inadmissible) received by the Board, as 

well as a transcript of the proceedings 

of any oral hearing before the Board, be 

made part of the record of the appeal. 

Paragraph (a) would also provide that a 

copy of such transcript must be made 

available to any party upon request. 

Proposed new § 405.1865(b) and (c) 

would make a distinction between the 

unappended record and an appendix to 

the record (although, as indicated above 

in the discussion of proposed paragraph 

(a), the term ‘‘record’’ is intended to 

encompass both the unappended and 

any appendix to the record). For 

purposes of the Board’s decision, 

paragraph (b) would provide that the 

record would consist of such evidence 

and other materials accepted by the 

Board, as well as the transcript(s) of any 

oral hearing(s) before the Board. Any 

evidence ruled inadmissible by the 

Board, and any other material not 

considered by the Board in making its 

decision, must be, to the extent 

practicable, clearly identified and 

segregated in an appendix to the record 

for the purpose of any review by the 

Administrator and/or the judiciary.

For purposes of Administrator review, 

§ 405.1865(c) would provide that the 

administrative record also includes all 

documents and any other tangible 

matter submitted to the Administrator 

by the parties to the appeal or by any 

non-party, in addition to all 

correspondence from the Administrator 

or the Office of the Attorney Advisor 

and all rulings, orders, and decisions by 

the Administrator. It would also specify 

that the provision in proposed 

§ 405.1865(b), that excluded evidence 

and other non-considered matter should 

be segregated and placed in an 

appendix, also pertains to evidence or 

other matter submitted to the 

Administrator and found inadmissible 

or not considered by the Administrator. 

Finally, paragraph (c) would also 

provide that the Administrator has the 

authority to reverse the Board’s 

determination regarding the 

admissibility of evidence or other 

matter. That is, the Administrator may 

exclude evidence or other matter that 

was admitted and considered by the 

Board if the Administrator determines 

that such evidence or other matter 

should not have been admitted and 

considered, and the Administrator may 

admit and consider evidence or other 

matter that was excluded and not 

considered by the Board if the 

Administrator determines that such 

evidence or other matter should have 

been admitted and considered by the 

Board. 

Q. Board Actions in Response to Failure 

To Follow Board Rules (§ 405.1868) 

Section 1878(e) of the Act provides 

the Board with ‘‘full power and 

authority to make rules and establish 

procedures, not inconsistent with the 

provisions of this title or regulations of 

the Secretary, which are necessary or 

appropriate to carry out the provisions 

of this section.’’ In accordance with the 

broad latitude granted the Board under 

this provision, we propose to add a new 

§ 405.1868 to specify that the Board has 

authority to take appropriate actions for 

failure to follow its established 

procedural requirements or for 

inappropriate conduct during hearings. 

In proposed § 405.1868(a), we would set 

forth this statutory language in the 

regulations to clarify the basis and 

breadth of the Board’s authority for 

conducting hearings under section 1878 

of the Act. 

As discussed previously, the Board 

has an unusually large backlog of cases 

that results in substantial delays in 

hearings. The Board is not able to 

dispose of cases expeditiously, in part, 

because of deliberate tactics by the 

parties to the hearing to delay the 

proceedings. One of the major objectives 

of administrative dispute resolution is 

to provide a decision as quickly as 

possible, while still allowing each party 

a fair opportunity to present its case. 

Therefore, we are proposing to specify 

in the regulations how the Board would 

exercise its authority to take appropriate 

action in response to undue delay and/

or a violation of its orders or rules. We 

propose to add a new § 405.1868(b) to 

provide that if the provider fails to meet 

any filing or procedural deadlines or 

other requirements established by the 

Board, the Board may dismiss the 

appeal, issue an order requiring the 

provider to show cause why the Board 

should not dismiss the appeal, or take 

other appropriate action. Also, proposed 

§ 405.1868(c) would specify that if the 

intermediary fails to meet any filing or 

procedural deadlines or other 

requirements set by the Board, the 

Board may issue a decision based on the 

written record submitted to that point or 

take other appropriate action. We note 

that, as discussed above, the Board 

would also have discretion to grant an 

extension of time to a party that has 

failed to meet a filing or procedural 

deadline, but only if the party shows 

good cause for the delay in accordance 

with proposed § 405.1835(e). 

R. Scope of Board’s Authority in a 

Hearing Decision § 405.1869) 

Section 1878(d) of the Act and 

§ 405.1869 give the Board the power to 

affirm, modify, or reverse the 

intermediary’s findings on each specific 

matter at issue in the intermediary 

determination for the cost reporting 

period under appeal, and to make 

additional revisions on specific matters 

regardless of whether the intermediary 

considered these matters in issuing the 

intermediary determination. We would 

clarify in § 405.1869(a) and (b) that the 

Board’s power to make additional 

revisions in a hearing decision does not 

authorize the Board to consider or 

decide a specific matter at issue for 

which it lacks jurisdiction (see 

§ 405.1840(b)) or which was not timely 

raised in the provider’s hearing request. 

35736 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

We would also revise the title of 

§ 405.1869 slightly.

S. Board Hearing Decision (§ 405.1871) 

We propose to revise current 

§ 405.1871 to provide more specificity 

as to the types of findings of fact and 

conclusions of law each Board decision 

must contain. We believe these 

revisions are appropriate as they will 

help ensure that the parties are fully 

informed as to the basis and reasoning 

of the Board’s decision, and will also 

assist the Administrator or a court in 

determining whether or to what extent 

a Board decision should be upheld. 

Section 405.1871(a) states that the 

Board’s decision must be based on 

evidence ‘‘as may be obtained or 

received by the Board.’’ We would 

revise this statement by clarifying that 

the Board’s decision must be based on 

the admissible evidence from the Board 

hearing and such other admissible 

evidence and written argument or 

comments as may be received by the 

Board and included in the record. 

Consistent with our proposed revisions 

to § 405.1840 (Board jurisdiction) and 

§ 405.1842 (expedited judicial review), 

we would require that the Board’s 

decision contain findings of fact and 

conclusions of law regarding the Board’s 

jurisdiction over each specific matter at 

issue. (We propose to delete current 

§ 405.1873, Board’s jurisdiction, as no 

longer necessary.) We would also 

require the Board’s decision to state 

whether the provider carried its burden 

of production of evidence and burden of 

persuasion, by establishing by a 

preponderance of the evidence that the 

provider is entitled to relief on the 

merits of the matter at issue. This 

requirement would ensure that the 

Board correctly allocated the burden of 

production and burden and proof on the 

provider, in accordance with our 

regulations at 42 CFR, part 413, CMS 

Ruling 79–60C, caselaw (see, for 

example, Butler County Mem’l. Hosp. v. 

Heckler, 780 F.2d 352 (3d Cir. 1985); 

Fairfax Hosp. Ass’n v. Califano, 585 

F.2d 602 (4th Cir. 1978)), and general 

principles of administrative law. We 

would also require the Board’s decision, 

with respect to any issue for which the 

policy expressed in a CMS instruction 

(other than a regulation or ruling) is 

dispositive but for which the Board 

would not affirm the intermediary’s 

adjustment, to explain how it gave great 

weight to such instruction (as required 

by § 405.1867) but did not affirm the 

intermediary’s adjustment. This 

requirement would ensure that the 

Board is giving proper weight to CMS 

instructions (other than regulations and 

Rulings, which are binding on the 

Board) and would allow a reviewing 

entity to discern the Board’s specific 

disagreement with the policy expressed 

in the instruction.

In proposed § 405.1871(b), we would 

revise the statement in current 

paragraph (b), that the Board’s decision 

is final and binding unless reviewed by 

the Administrator (or reopened and 

revised), to say that the Board’s decision 

is final and binding unless the 

Administrator renders a decision 

reversing, modifying, affirming, or 

remanding the Board’s decision (or 

unless the Board’s decision is reopened 

and revised). The purpose of the 

proposed revision is to clarify that the 

act of taking review, by itself, that is, 

without a subsequent timely decision by 

the Administrator, will not provide a 

Board decision non-final and nonbinding. However, consistent with 

proposed changes to §§ 405.1836(e)(2), 

405.1842(g)(1), 405.1853(e)(6)(ii), 

405.1857(d)(2), and 405.1868(f)(2), we 

also propose to clarify in paragraph (b) 

that the Board’s decision is inoperative 

during the 60-day period of review by 

the Administrator. 

T. Administrator Review (§ 405.1875) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Administrator Review’’ at the 

beginning of your comments.] 

We propose to clarify the existing 

procedures for obtaining Administrator 

review of a Board hearing decision, and 

to address what other types of Board 

decisions are subject to Administrator 

review, the timing of such review, and 

the procedures for obtaining such 

review. 

We would revise § 405.1875(a) in 

several ways. We would revise the 

material in current paragraph (a)(2) 

relating to the role of the Office of the 

Attorney Advisor, and place it in the 

introductory language of paragraph (a). 

We would require all requests for 

Administrator review, as well as all 

written submissions to the 

Administrator specified in 

§ 405.1875(c), whether they be from a 

party, or from an affected non-party 

such as CMS, to be sent to the Office of 

Attorney Advisor. We would also 

specify that the Office of Attorney 

Advisor must examine each Board 

decision and each review request and 

written submission, of which it becomes 

aware, in order to assist the 

Administrator in the exercise of his or 

her discretionary review authority. We 

say ‘‘of which it becomes aware’’

because we do not propose that the 

Board would be required to send all 

jurisdictional decisions and 

interlocutory orders and rulings to the 

Office of Attorney Advisor, as we do not 

believe it would be practicable to 

require the Board to do so, given the 

large number of such decisions and 

rulings. The Board does send a copy of 

all its decisions on the merits, including 

EJR decisions, to the Office of Attorney 

Advisor, and we would codify this 

practice in paragraph (a). 

We would specify in proposed 

§ 405.1875(a)(1) that the date of 

rendering of any Administrator decision 

must be no later than 60 days after the 

date of receipt by the provider of a 

reviewable Board decision or action. 

The date of rendering is the date the 

Administrator signs the decision, and 

not the date the decision is mailed or 

otherwise transmitted to the parties. 

In proposed § 405.1875(a)(2), we 

would specify the types of final Board 

decisions that are subject to immediate 

review by the Administrator. The types 

of final decisions that the Board may 

issue, and which are subject to 

immediate review by the Administrator, 

would be specified in paragraph (a)(2) 

as: Board Hearing Decision (see 

§ 405.1871); Board Dismissal Decision 

(see §§ 405.1836(e)(1) and (e)(2), 

§ 405.1840(c)(2), §§ 405.1868(d)(1) and 

(2)); and Board Expedited Judicial 

Review Decision (see §§ 405.1842(h)). In 

addition to those decisions that would 

be specified as final in paragraph (a)(2), 

the Board may issue a decision or take 

some type of action from time to time 

that may have the characteristics of a 

final decision. Therefore, so as not to 

make the list of Board decisions 

specified in paragraph (a)(2) exhaustive, 

we propose that the Administrator 

would have the authority, in a given 

case, to deem a Board decision or action 

to be final and thus subject to 

immediate review. (For example, the 

Administrator might deem a Board 

remand order to be final if it ordered the 

intermediary or CMS to take certain 

action, which, if resulting in the 

reimbursement of costs or the granting 

of other relief, the Secretary would be 

unable to appeal. (see Colon v. Sec’y of 

HHS, 877 F.2d 148 (1st Cir. 1989); Stone

v. Heckler, 722 F.2d 464 (9th Cir. 1983), 

and cases cited therein.)) We say ‘‘in a 

given case’’ because the fact that the 

Administrator would deem a particular 

action to be final in one case would not 

entitle a party to seek immediate review 

in another case, based on the party’s 

belief that the action in the second case 

is similar to the action in the first case. 

Rather, upon request or on his or her 

own motion, the Administrator would 

have to specifically deem the Board’s 

action in the second case to be final for 

purposes of immediate review.

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35737

Proposed § 405.1875(a)(3) would then 

specify that any Board decision or 

action not specified as final, or deemed 

to be final by the Administrator in a 

given case under paragraph (a)(2), 

would be non-final and not subject to 

immediate review, except for the 

following: a Board ruling authorizing 

discovery or disclosure of a matter for 

which an objection was made based on 

privilege or other protection from 

disclosure as case preparation or 

confidential material; and, a Board 

subpoena compelling disclosure of a 

matter for which an objection was made 

based on privilege or other protection 

from disclosure as case preparation or 

confidential material. 

We believe the foregoing revisions 

would provide greater clarity as to what 

types of Board decisions may be 

immediately reviewable by the 

Administrator. In particular, we note 

that because the current regulations do 

not specify that the Board’s assumption 

of jurisdiction in a case is a non-final 

action and not subject to immediate 

review by the Administrator, requests 

have been made by intermediary 

counsel to have the Administrator 

immediately rule that the Board 

incorrectly assumed jurisdiction. (By 

‘‘immediately,’’ we mean prior to the 

issuance of a decision by the Board on 

the merits of the case.) Such requests 

have consumed time and resources of 

the Administrator despite the fact that it 

has been the Administrator’s wellestablished practice to not immediately 

review the Board’s taking of 

jurisdiction. By proposing that the 

Board’s finding or assumption of 

jurisdiction is a non-final action and not 

subject to immediate review by the 

Administrator, we hope to avoid any 

confusion on this matter and to 

conserve needed resources. Conforming 

changes on this point would also be 

made to § 405.1840(d). 

We also believe that the two proposed 

exceptions to the proposed policy that 

non-final orders would not be 

immediately reviewable are necessary 

and appropriate. Our reasons for the 

exceptions are also grounded in the 

recognition that certain non-final orders 

have a practical finality to them. That is, 

a Board order authorizing discovery or 

disclosure of, or a Board subpoena 

compelling disclosure of, a matter for 

which an objection was made based on 

privilege or other protection from 

disclosure as case preparation or 

confidential material, is for all intents 

and purposes final unless it is 

immediately reviewable, for once the 

disclosure is made the effects of the 

disclosures cannot be reversed.

In proposed § 405.1875(b), we would 

specify an illustrative list of criteria the 

Administrator will use to determine 

whether he or she will review a 

reviewable Board decision or reviewable 

Board non-final order. (We would revise 

the material in current paragraph (b), 

relating to the time in which to seek 

review of a Board decision, and place it 

in paragraph (c), as discussed below.) 

The criteria we would specify include, 

with slight expansion, the criteria that 

appears in current paragraph (c). We 

would specify that the Administrator 

will consider criteria ‘‘such as’’ the 

criteria listed, in order to emphasize 

that the list is not exclusive, and thus 

is not a limit on the Administrator’s 

discretionary review authority. (The 

current language ‘‘the Administrator 

will normally consider’’ is also intended 

to convey that the list is not exclusive.) 

We would reserve the right for the 

Administrator to exercise discretionary 

review authority for reasons other than 

those listed, although we have 

attempted to anticipate all the reasons 

for which the Administrator would take 

review and include those reasons in the 

proposed list. We wish to point out 

three proposed changes. First, we would 

delete the current criterion of whether 

the Board’s decision is supported by 

substantial evidence. Substantial 

evidence is less than a preponderance, 

and we believe it is appropriate for the 

Administrator to exercise discretionary 

review authority where the 

Administrator concludes that the 

Board’s decision is incorrect, even if the 

Board’s decision is supported by 

substantial evidence. Second, we would 

include as a criterion whether the 

Board’s hearing decision met the 

requirements of section 405.1871(a). 

The proposed change would reflect that 

under proposed § 405.1871(a), the 

Board’s decision must include findings 

of fact and conclusions of law regarding 

the Board’s jurisdiction over each 

specific matter at issue, and whether the 

provider carried its burden of 

production of evidence and burden of 

persuasion, and must include 

appropriate citations to authority. We 

believe it is appropriate for the 

Administrator to review any Board 

hearing decision that does not meet 

these requirements. Third, we would 

include as a criterion whether the Board 

erred in refusing to admit certain 

evidence or in not considering other 

submitted matter, or erred in admitting 

certain evidence or considering other 

submitted matter (see § 405.1855 and 

proposed § 405.1865(b)). 

We would revise the procedures for 

Administrator review in current 

§ 405.1875(c) and (d), and set them forth 

in proposed paragraph (c). In proposed 

paragraph (c)(1), we would specify that 

a party or CMS may request review of 

any reviewable decision or reviewable 

non-final order (as specified in (a)(2) 

and (a)(3), respectively), but a non-party 

other than CMS may request review 

only of a Board discovery order or 

subpoena to which an objection was 

made based on privilege or other 

protection from disclosure as case 

preparation or confidential material. We 

would also allow a party or CMS to 

respond to any request for review. A 

request for review, or a response to a 

request, would have to be in writing, 

identify the specific issues for which 

review is requested, and explain why 

review is or is not appropriate, under 

the criteria set forth in paragraph (b) or 

for some other reason. In order to be 

timely, any review request would have 

to be received by the Office of the 

Attorney Advisor no later than 15 days 

after the date the party or non-party 

making the request received the Board’s 

decision or other reviewable action. We 

would require a copy of any review 

request (or response to the request) to be 

mailed promptly to the Office of the 

Attorney Advisor, to each party to the 

appeal, to CMS, and to any non-party 

other than CMS that is affected. 

In proposed § 405.1875(c)(2), we 

would provide that, whenever the 

Administrator decides to review a Board 

decision or other matter, the 

Administrator issue a written notice to 

the parties, to CMS, and to any other 

affected non-party that a Board’s 

decision or other matter will be 

reviewed, and indicate in the notice the 

specific issues that will be considered. 

We would also restate in proposed 

paragraph (c)(2) that which appears in 

current paragraph (d)(2), namely, that 

the Administrator may decline to review 

a Board decision or other matter, or any 

issue in a decision or matter, even if a 

proper request for review was 

submitted. We would specify that where 

the Administrator declines to review a 

Board decision, the Administrator will 

notify the parties, CMS, and any other 

affected non-party.

In proposed § 405.1875(c)(3), we 

would propose minor changes to the 

process (which currently appears at 

paragraph (e)) for making written 

comments to the Administrator 

following notice that the Administrator 

has decided to take review. Consistent 

with other changes and clarifications to 

§ 405.1875 discussed above, we would 

specify that: (1) CMS or any other 

affected non-party that has properly 

requested review may submit 

comments; (2) comments may be 

35738 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

submitted in response to any 

Administrator notice of intention to 

review a Board decision or other 

reviewable action; (3) all comments 

must be filed with the Office of the 

Attorney Advisor. We would also 

specify that the date of receipt by the 

Office of the Attorney Advisor of any 

comments must be no later than 15 days 

after the date the party, CMS or other 

affected non-party submitting comments 

received notice of the Administrator’s 

intention to take review. 

Proposed § 405.1875(d) would contain 

what currently appears in paragraph (f) 

for the prohibition on ex parte

communications, with one minor 

change. Because CMS or another 

affected non-party would have the right 

to seek Administrator review of certain 

matters under proposed paragraph 

(c)(1), and would have the right to make 

written submissions to the 

Administrator under proposed 

paragraph (c)(3), it is necessary to 

specify that the rules on ex parte

communications would apply to 

affected non-parties. 

In proposed § 405.1875(e), we would 

update and revise the procedures for 

issuing an Administrator decision that 

currently appear in paragraph (g). In 

proposed paragraph (e)(1)(i), we would 

specify that, for review of a Board 

decision described in section 1875(a)(2), 

an Administrator decision will affirm, 

reverse, modify, or vacate and remand 

the Board’s decision. In proposed 

paragraph (e)(1)(ii), we would state that 

with respect to review of one of the 

reviewable non-final orders listed in 

section 1875(a)(3), an Administrator 

decision will affirm, reverse, modify or 

remand the Board’s order, and will 

remand the case to the Board for further 

proceedings. Thus, the distinction 

between an Administrator decision that 

follows review of a Board decision, and 

an Administrator decision that follows 

review of a reviewable Board non-final 

order, is that in the latter situation the 

Administrator decision will always 

return the case to the Board for further 

proceedings.

In proposed paragraph (e)(2) we 

would specify that the date of rendering 

of any decision of the Administrator 

under (e)(1)(i) or (e)(l)(ii) must be no 

later than 60 days after the date of the 

provider’s receipt of the Board’s 

decision or reviewable non-final order. 

We would also require that a copy of the 

Administrator’s decision be sent to any 

affected non-party. 

In proposed paragraph (e)(3) we 

would specify the exclusive list of 

factual and legal materials on which the 

Administrator may base his or her 

decision. The list of materials is similar 

to that specified in current paragraph 

(g)(3), except that, by stating that the 

Administrator may base his or her 

decision on ‘‘[t]he administrative record 

for the case (see § 405.1865),’’ we mean 

to include materials that the Board 

excluded but which the Administrator 

determines should have been admitted, 

and we mean to exclude materials that 

the Board admitted but which the 

Administrator determines should have 

been excluded. The language in current 

§ 405.1875 (g)(3)(ii), relating to 

comments submitted to the 

Administrator, has been deleted, 

because comments are contained within 

the proposed administrative record 

category, as the administrative record 

would be defined in § 405.1865 to 

include all written materials submitted 

to, and accepted by, the Administrator. 

For the sake of consistency, we would 

also make the exclusive list of factual 

and legal materials on which the 

Administrator may base his or her 

decision applicable to decisions by the 

Administrator to remand. This would be 

a change from current paragraph (g)(3), 

which specifies ‘‘[a]ny decision other 

than to remand.’’

In proposed paragraph (e)(4), we 

would specify the effect of a timely 

decision by the Administrator. We 

believe it is appropriate to do so in 

order to notify the parties of their rights 

and responsibilities. We would specify 

that a timely Administrator decision 

that affirms, reverses, or modifies a final 

Board decision (that is, a Board decision 

specified in § 405.1875(a)(2)) is final 

and binding on each party to the appeal, 

and we would cross-reference 

§ 405.1877(a)(4). Section 405.1877(a)(4) 

would specify that where the 

Administrator affirms, modifies or 

reverses a Board decision, the 

Administrator’s decision—and only the 

Administrator’s decision—is subject to 

judicial review. In addition, we would 

specify in proposed paragraph (e)(4) that 

if such an Administrator decision is not 

appealed to a court, the intermediary 

has the responsibility of implementing 

the decision in accordance with 

proposed § 405.1803(d). We would also 

specify that an Administrator decision 

may be reopened by the Administrator 

in accordance with our regulations on 

reopening (§ 405.1885 through 

405.1889). In addition to stating the 

above effects of a final Administrator 

decision, we would specify in paragraph 

(e)(4) that a decision by the 

Administrator to remand a matter to the 

Board for further proceedings is not a 

final decision for purposes of judicial 

review, and does not invoke the 

effectuation responsibilities of 

§ 405.1803(d). 

Finally, in proposed § 405.1875(f), we 

would revise the rules and procedures 

that currently appear in paragraph (h) 

on Administrator remand orders. In 

proposed paragraph (f)(1)(i) we would 

specify that an Administrator remand 

order of a Board final decision (see 

section 1875(a)(2)) has the effect of 

vacating that decision and requiring 

further proceedings in accordance with 

the Administrator remand order, and in 

proposed paragraph (f)(1)(ii) we would 

specify that an Administrator 

affirmance, reversal, modification, or 

remand of a reviewable Board non-final 

order (see § 405.1875(a)(3)) has the 

effect of requiring further proceedings in 

accordance with the Administrator 

order. These statements in paragraphs 

(f)(1)(i) and (f)(1)(i) would also appear in 

paragraphs (e)(1)(i) and (e)(1)(ii).

Proposed paragraph (f)(2) would 

contain the text that currently appears 

in § 405.1875(h)(2), with some clarifying 

changes. In proposed paragraphs 

(f)(3)(and (f)(4), we would make minor 

revisions to the text that currently 

appears at (h)(3) and (h)(4). Current 

paragraph (h)(3) specify that the Board 

will take the action ‘‘requested’’ in the 

Administrator’s remand order, and we 

would clarify this language to state that 

the Board is required to take the actions 

required in the Administrator remand 

order. Also, where current paragraph 

(h)(3) specifies that the Board will issue 

a new ‘‘decision’’ in response to the 

Administrator remand order, we would 

specify that the Board is required to 

‘‘issue a new decision pursuant to 

paragraph (f)(1)(i) of this section, or an 

initial decision or a further remand 

order, discovery ruling, or subpoena, as 

applicable, under paragraph (f)(1)(ii).’’

The purpose of the proposed language is 

to recognize that the subject of the 

Administrator’s review and ensuing 

remand order may have been a final 

Board decision as described in proposed 

paragraph (a)(2) of § 405.1875 (in which 

case a ‘‘new’’ decision would be 

required from the Board), or it may have 

been a reviewable non-final order as 

described in proposed § 405.1875(a)(3) 

(in which case the Board would be 

required to issue an ‘‘initial’’ decision, 

or no decision at all, but rather a further 

remand order, discovery ruling, or 

subpoena ruling). Similarly, current 

paragraph (h)(4) specifies that the ‘‘new 

decision’’ issued by the Board in 

response to the Administrator remand 

will become final unless affirmed, 

reversed, modified, or remanded again 

by the Administrator. Proposed 

paragraph (f)(4) would take into account 

that, in response to the Administrator 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35739

remand order, the Board may be 

required to issue a new final decision or 

an initial decision (which would be the 

final decision of the Secretary unless 

affirmed, reversed, modified, or 

remanded by the Administrator), or the 

Board may be required to issue a further 

remand order, discovery ruling, or 

subpoena ruling (which would not be 

the final decision of the Secretary 

regardless of whether the Administrator 

took review of the further remand order, 

discovery ruling, or subpoena ruling).

In proposed paragraph (f)(5), we 

would specify that the Administrator 

has the authority to remand a matter not 

only to the Board, but also to any 

component of HHS or CMS, or to an 

intermediary, under appropriate 

circumstances (including, but not 

limited to the purpose of implementing 

a court’s order). We recognize there is a 

split of authority on the issue of 

whether the Administrator has remand 

authority, but we believe the better view 

is espoused in Gulf Coast Home Health 

Services, Inc. v. Califano, 1978 U.S. 

Dist. LEXIS 15069 (D.D.C. 1978). 

U. Judicial Review (§ 405.1877) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Judicial Review’’ at the beginning of 

your comments.] 

We propose to clarify the existing 

procedures for obtaining judicial review 

of a Board or Administrator decision, 

and to specify how court remand orders 

will be processed and implemented. 

Current § 405.1877(a) specifies that a 

‘‘final decision of the Board’’ is subject 

to judicial review (and that a Board’s 

decision is not final if the Administrator 

timely affirms, modifies or reverses it), 

but does not otherwise define ‘‘final 

decision of the Board.’’ We would revise 

paragraph (a), consistent with our 

proposed revisions to § 405.1875, to 

specify that a Board decision is final if 

it is one of the decisions specified in 

proposed § 405.1875(a)(2)(i) through 

(iv), and has not been timely reversed, 

affirmed, modified, or remanded by the 

Administrator. The types of decisions 

specified in proposed § 405.1875(a)(2)(i) 

through (iv) are: Board Hearing Decision 

(see § 405.1871); Board Dismissal 

Decision (see § 405.1836(e)(1) and (2), 

§ 405.1840(c)(2) and (3), 

§ 405.1868(d)(1) and (2)); Board 

Expedited Judicial Review Decision (see 

§ 405.1842(h)); and any other decision 

deemed final by the Administrator in a 

particular case. Also, because we 

occasionally receive civil complaints 

filed against the Administrator of CMS 

or CMS itself, or an intermediary, we 

would inform that the only proper 

defendant in an action brought under 

section 1878(f)(1) of the Act is the 

Secretary. Finally, in response to a 

question we received, we would clarify 

that where a provider is dissatisfied 

with a final and otherwise judicially 

reviewable decision of the Board, it is 

not necessary that the provider ask the 

Administrator to review the decision 

under § 405.1875. If the provider does 

not ask the Administrator to review a 

final Board decision, and the 

Administrator does not review it, the 

provider may nonetheless seek judicial 

review of the Board decision. (Of 

course, if the Administrator were to 

review the Board decision and issue an 

Administrator decision, the 

Administrator decision would be the 

only decision subject to review.) 

Although we believe this principle can 

be gleaned from the absence of any 

requirement in our current regulations 

to seek Administrator review before 

seeking judicial review of a final Board 

decision that has not been affirmed, 

modified, reversed or remanded by the 

Administrator, we believe it is 

worthwhile to add specific language to 

proposed paragraph (a)(3) on this point. 

In proposed § 405.1877(b) we would 

clarify the language in existing 

paragraphs (b) and (c) as to the time for 

seeking judicial review in the following 

three situations: (1) The Administrator 

declines review; (2) the Administrator 

accepts review and timely reverses, 

affirms, or modifies the Board decision; 

and (3) the Administrator accepts 

review but does not timely render a 

decision. Although it has always been 

our policy that Administrator remand 

orders are non-final and not subject to 

judicial review, and although current 

paragraph (a) implies as much by stating 

that a decision by the Administrator 

reversing, affirming, or modifying a 

Board decision is subject to judicial 

review, we would specify explicitly in 

proposed paragraph (b)(3) that an 

Administrator remand of a Board 

decision is not subject to judicial 

review. We would also clarify existing 

policy in proposed paragraph (b)(3) by 

stating that an Administrator remand of 

a Board decision vacates that Board 

decision and that the vacated Board 

decision is not subject to judicial 

review.

In proposed paragraph (c)(1), we 

would specify the limitation expressed 

in section 1878(g)(1) of the Act, that an 

intermediary’s finding that expenses 

incurred for items and services by a 

provider to an individual are not 

payable because those items or services 

are excluded from coverage under 

section 1862 of the Act, is not 

reviewable by the Board and is not 

subject to judicial review under section 

1878(f)(1) of the Act. We would specify 

that the finding is subject to 

administrative review under our 

regulations at 42 CFR, subparts G and H, 

of Part 405, and subpart A of Part 478, 

as applicable, and is subject to judicial 

review in accordance with the 

applicable provisions of sections 1155, 

1869 and 1879(d) of the Act. In 

proposed paragraph (c)(2), we would 

restate, with minor modification, the 

language in current paragraph (d), that 

certain matters affecting payment to 

hospitals under the prospective 

payment system are not subject to 

administrative or judicial review, as 

provided in section 1886(d)(7) of the 

Act, and § 405.1804 and proposed 

§ 405.1840(b)(2) of our regulations. 

In proposed paragraph (d), we would 

clarify language in current paragraph 

(e), relating to group appeals. 

Specifically, we would specify that any 

providers that wish to seek judicial 

review of a final Board or Administrator 

decision on a group appeal brought 

under § 405.1837, must do so as a group 

for the specific matter at issue and 

common factual or legal issue that was 

addressed in the final Board or 

Administrator decision. 

In proposed § 405.1877(e)(1) and 

(e)(2), we would restate, with minor 

language changes, the provisions of 

current paragraph (f) for the venue 

requirements for single and group court 

appeals, respectively. A civil action 

seeking judicial review of a single 

provider appeal must be brought in the 

District Court of the United States in 

which the provider is located, or in the 

United States District Court for the 

District of Columbia. A civil action 

seeking judicial review of a group 

appeal must be brought in the District 

Court of the United States in which the 

greatest number of providers 

participating in both the group appeal 

and the civil action are located, or in the 

United States District Court for the 

District of Columbia. 

Current § 405.1877(g), pertaining to 

service of process, would be 

redesignated as paragraph (f). 

In proposed paragraph (g)(1), we 

would provide that, subject to proposed 

paragraph (g)(3), a court’s remand order 

will be deemed to be directed to the 

Administrator for processing, regardless 

of whether the order refers to the 

Administrator, the Secretary or some 

component of the Department of HHS, 

the Board or the intermediary. We 

believe that such a rule is appropriate 

because the Secretary is the real party in 

interest in any civil action seeking 

judicial review of a final decision by the 

Administrator or the Board, and the 

Secretary has delegated responsibility to 

35740 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

the Administrator to review decisions of 

the Board and to issue final decisions on 

behalf of the Secretary. In proposed 

paragraph (g)(2), we would specify the 

procedures for the Administrator to 

follow in processing a court remand 

order. Upon receipt of a court remand 

order, the Administrator would prepare 

an appropriate remand order and, where 

applicable, file the order in any Board 

appeal at issue in the civil action. 

However, we would also provide, in 

paragraph (g)(3), that the above rule 

does not apply if its application would 

be inconsistent with the court’s remand 

order or any other order of a court 

regarding the civil action. 

V. Reopening Procedures (§§ 405.1885 

Through 405.1889) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Reopening Procedures’’ at the 

beginning of your comments.] 

Regulations in Subpart R of Part 405 

provide for a reopening and revision 

procedure. A reopening and revision 

renders non-final and non-binding a 

determination, that, left undisturbed, 

would otherwise have been final and 

binding. A reopening procedure is 

neither specifically authorized, nor 

required, by statute. Rather, reopening is 

authorized only by our regulations, 

based on the Secretary’s general 

rulemaking authority in sections 1102(a) 

and 1871(a) of the Act. (See HCA Health 

Servs. of Oklahoma, Inc. v.Shalala, 27 

F.3d 614, 618 (D.C. Cir. 1994). See also 

Your Home Visiting Nurse Servs., Inc. v. 

Shalala, 525 U.S. 449, 454 (1999)).

We propose to clarify our procedures 

on reopening and revising final 

determinations. Previously, not all of 

our policies were set forth explicitly in 

regulations, and there was litigation on 

specific issues. Our proposals are an 

attempt to provide as clear a statement 

of our policies as possible. We also note 

that a few clarifications to the reopening 

rules were recently made, in the final 

rule published at 67 FR 49982 (August 

1, 2002). That rule first clarified that an 

intermediary’s discretion under section 

405.1885(a) to reopen or not reopen a 

particular matter is limited by an 

explicit directive from CMS pertaining 

to that matter. That is, CMS retains the 

ultimate authority as to whether an 

intermediary may or may not reopen a 

matter, and one should not infer that 

CMS has directed an intermediary to 

reopen a matter, in the absence of a 

explicit direction from CMS to the 

intermediary. The August 1, 2002 rule 

also clarified that a change in legal 

interpretation or policy by CMS in a 

regulation, CMS ruling, or CMS general 

instruction, whether made in response 

to judicial precedent or otherwise, is not 

a basis for reopening an intermediary 

determination or intermediary hearing 

officer decision. Finally, in response to 

a comment on the proposed rule, the 

August 1, 2002 final rule clarified that 

CMS may direct an intermediary to 

reopen a particular intermediary 

determination or decision in order to 

implement a final agency decision, a 

final and non-appealable court 

judgment, or an agreement to settle an 

administrative appeal or a lawsuit, 

regarding the same determination or 

decision. 

Our proposed changes to the 

reopening rules, set forth below, would 

incorporate the clarifications made by 

the August 1, 2002 final rule. 

1. Reopening an Intermediary or 

Secretary Determination or Reviewing 

Entity Decision (§ 405.1885) 

We propose to revise and make 

several changes to § 405.1885. In 

proposed § 405.1885(a), we would set 

forth an overview of the reopening 

process. We would specify that a 

Secretary or intermediary determination 

or a decision by a reviewing entity (that 

is, an intermediary hearing officer(s), a 

CMS reviewing official, the Board or the 

Administrator, see § 405.1801(a)) may 

be reopened either through own motion 

by the intermediary or the applicable 

reviewing entity, or by granting a 

provider’s request to reopen. (Our 

current regulations do not address 

reopening of Secretary determinations 

(which are rendered by CMS), such as 

a determination to grant or deny a 

provider’s request for an adjustment to 

its rate-of-increase ceiling under 

§ 413.40(e). Nor do they address 

reopening of decisions by CMS 

reviewing officials.) We would also 

reiterate in paragraph(a) one of the 

points made in the August 1, 2002 final 

rule, namely, that CMS has the final say 

as to whether an intermediary or 

intermediary hearing officer(s) may or 

may not reopen an intermediary 

determination or intermediary hearing 

decision. We would provide that where 

CMS directs an intermediary or 

intermediary hearing officer(s) to reopen 

an intermediary determination or 

decision, the resulting reopening is 

considered an own motion reopening. 

(Proposed § 405.1885(b) would set forth 

specific time limits for reopenings by 

request and for own motion reopenings.) 

Finally, we would provide that a 

decision whether or not to reopen a 

determination or decision is not subject 

to further administrative review and 

inform that it is not subject to judicial 

review. We have always regarded 

determinations to reopen or not to 

reopen to be within the sole discretion 

of the intermediary or the reviewing 

entity, as applicable. In Your Home 

Visiting Nurse Services, Inc. v. Shalala, 

525 U.S. 449, 454 (1999), the Supreme 

Court affirmed our policy that a 

determination by the intermediary not 

to reopen was not subject to 

administrative or judicial review.

In proposed § 405.1885(b), we would 

revise and clarify the time limits for 

reopening. In proposed paragraph (b)(1), 

we would clarify that in order for CMS, 

the intermediary, or a reviewing entity 

to reopen timely on its own motion, the 

notice of reopening must be mailed no 

later than 3 years after the date of the 

original determination or decision that 

is the subject of the reopening. In 

proposed paragraph (b)(2), we would 

specify the time in which a request to 

reopen must be made. Current 

§ 405.1885(a) specifies that a request to 

reopen ‘‘must be made within 3 years of 

the date of the notice’’ of the 

determination or decision. We propose 

to clarify this language by stating that a 

provider request to reopen must be 

received by the intermediary or 

reviewing entity, as applicable, no later 

than 3 years after the date of the 

rendering of the original determination 

or decision by the intermediary or 

reviewing entity. The 3-year standard 

applies to receipt of the request for 

reopening, not to the issuance of a 

reopening notice. When the request for 

reopening is received late in the 3-year 

period, the issuance of a reopening 

notice does not have to occur before the 

expiration of 3 years. The intermediary 

may take a reasonable amount of time to 

consider the request and seek additional 

information, and may then issue the 

notice of reopening. We believe this 

proposed change will avoid any 

question as to whether a request for 

reopening was timely. We would also 

clarify in paragraph (b)(2) that a request 

for reopening, does not, by itself, alter 

the time for seeking administrative or 

judicial review of a determination or 

decision. Example: A provider receives 

a notice of amount of program 

reimbursement on January 2. Under our 

regulations the provider has 180 days 

from January 2 to seek a Board hearing 

(unless the time is extended for good 

cause). Under our proposal, if the 

provider requested a reopening on 

March 2, the request, by itself, would 

not extend the time for seeking a Board 

hearing, and the time to request a Board 

hearing would continue to be 180 days 

after January 2. (We discuss below our 

proposed clarifications to § 405.1887 

concerning the effects a notice of 

reopening and a notice after reopening 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35741

have on the time to appeal a 

determination or decision.) 

Proposed paragraph (b)(3) would 

combine the substance of language that 

currently appears in § 405.1885(a) and 

(d), namely that an intermediary 

determination or a decision by the 

reviewing entity may not be reopened 

after the 3-year period specified in 

proposed (b)(1) and (b)(2), except where 

the determination or decision was 

procured by fraud or similar fault, in 

which case reopening may be made at 

any time. 

In proposed § 405.1885(c) we would 

restate our current rules on which 

component or entity has the authority to 

reopen a prior determination or 

decision. With one exception, authority 

or ‘‘jurisdiction’’ to reopen would be the 

exclusive province of the component or 

entity that rendered the determination 

or decision that is the subject of the 

reopening. Thus, jurisdiction for 

reopening a Secretary determination, 

CMS reviewing official decision, Board 

decision, and Administrator decision 

would lie exclusively with CMS, the 

CMS reviewing official, the Board, and 

the Administrator, respectively. The 

current exception to this general rule of 

exclusive authority, which we propose 

to continue, is that the discretion of an 

intermediary or intermediary hearing 

officer(s) to reopen or not reopen an 

intermediary determination or 

intermediary hearing decision is subject 

to a directive from CMS to reopen or not 

reopen.

In paragraph (c)(1) we would specify 

that CMS may direct an intermediary or 

intermediary hearing officer(s) to reopen 

and revise an intermediary 

determination or intermediary hearing 

officer(s) decision by providing explicit 

direction to the intermediary or hearing 

officer(s) to reopen and revise, and that 

CMS’s authority is constrained only by 

the time limits set forth in proposed 

paragraph (b) and the limitation in 

proposed paragraph (c)(1)(ii) (discussed 

below). As we stated in the August 1, 

2002 final rule (67 FR 50096–97), the 

purpose of requiring an explicit 

direction to reopen and revise is to 

prevent any misunderstanding as to 

whether CMS has directed a reopening, 

including a claim that CMS has 

impliedly directed a reopening through 

publication or issuance of a change in 

policy. 

In proposed paragraph (c)(1)(i), we 

would give two examples of CMSdirected reopenings. The first example 

is where CMS provides explicit notice 

to the intermediary that the 

intermediary determination or the 

intermediary hearing decision is 

inconsistent with the applicable law, 

regulations, CMS ruling, or CMS general 

instructions in effect, and as CMS 

understood those legal provisions, at the 

time the determination or decision was 

rendered by the intermediary. This 

example, as recently clarified by the 

August 1, 2002 final rule, has been in 

§ 405.1885(b) of our regulations since its 

inception. We propose to place it under 

the heading of ‘‘Example’’ to further 

reinforce the discretionary nature of 

reopenings, including CMS-directed 

reopenings, and to avoid implying that 

CMS must direct an intermediary or 

intermediary hearing officer(s) to reopen 

in such a situation. Our proposed 

second example of a CMS-directed 

reopening currently appears (with 

slight, non-substantive wording 

differences) at § 405.1885(b)(3). It was 

added by the August 1, 2002 final rule 

in response to our concern that the 

clarifications proposed for that rule 

might be misinterpreted as meaning that 

CMS would be precluded from requiring 

the reopening of a particular 

intermediary determination or decision 

in order to implement a specific final 

agency decision, final and nonappealable court judgment or a specific 

agreement to settle an administrative 

appeal or a lawsuit. See 67 FR 50099. 

In paragraph (c)(1)(ii) we would 

provide that a change of legal 

interpretation or policy by CMS in a 

regulation, CMS ruling, or CMS general 

instruction, whether made in response 

to judicial precedent or otherwise, is not 

a basis for reopening a CMS or 

intermediary determination, an 

intermediary hearing decision, a CMS 

reviewing official decision, a Board 

decision, or an Administrator decision, 

under this section. We explained in the 

August 1, 2002 final rule that it was 

never our policy to require 

intermediaries to reopen based on a 

change in legal interpretation or policy, 

regardless of the impetus of such 

change, and that intermediary 

reopenings based on a change in legal 

interpretation or policy would raise 

questions of impermissible retroactive 

rulemaking. See 67 FR 50096. The 

August 1, 2002 final rule made clear 

that intermediary and intermediary 

hearing officer(s) reopenings based on a 

change in legal interpretation or policy 

are not permitted, and we believe that 

fairness and concerns of possible 

impermissible retroactive rulemaking 

dictate that we should extend such a 

prohibition on such reopenings to CMS 

(with respect to Secretary 

determinations), CMS reviewing 

officials, the Board, and the 

Administrator. 

In proposed paragraphs (c)(3) and 

(c)(4), we would clarify the authority, 

and specify the procedures, for 

intermediary reopenings in two specific 

situations. In proposed paragraph (c)(3), 

we would state that the intermediary 

may reopen, on its own motion or on 

request, a determination that is 

currently pending on appeal before the 

Board or the Administrator. The scope 

of the reopening could include any 

matter covered by the determination, 

including those specific matters that 

have been appealed to the Board or the 

Administrator. The intermediary would 

be required to notify the Board of the 

reopening. In proposed paragraph (c)(4) 

we would provide that an intermediary 

may reopen, on its own motion or on 

request of the provider(s), a 

determination for which no appeal has 

been taken, but for which the time to 

appeal to the Board has not yet expired. 

Finally, we would delete as 

unnecessary current § 405.1885(f) which 

relates to cost reporting periods ending 

prior to December 31, 1971. 

2. Required Notices Under Reopening 

Procedures; Effect of a Reopening 

(§ 405.1887) 

In proposed § 405.1887 we would 

specify the obligations of the 

intermediary or reviewing entity, as 

applicable, to: (1) Provide written notice 

to all parties of its intention to reopen; 

(2) to allow the parties a reasonable 

period of time in which to present any 

additional evidence or argument in 

support of their positions; and (3) to 

notify all parties, at the conclusion of 

the reopening, of the results of the 

reopening, including any revisions that 

have been made.

Our proposed language for 

§ 405.1887(d) is meant to state our 

longstanding policy that a reopening of 

a determination by itself does not 

extend appeal rights, and that any 

matter that is considered during the 

course of a reopening (including a 

matter specifically identified in a notice 

of reopening) but is not revised is not 

within the proper scope of an appeal of 

a revised determination or decision (see 

§ 405.1889). In Edgewater Hospital v. 

Bowen, 857 F.2d 1123 (7th Cir. 1989), 

the intermediary issued an NPR and, 

following a reopening, a revised NPR. 

The provider appealed the disallowance 

of two items that were addressed in the 

original NPR and which were identified 

in the notice of reopening, but were not 

revised in the revised NPR. The appeal 

was within 180 days after the revised 

NPR, but more than 180 days after the 

original NPR. Based on the ‘‘clear 

language of the Regulations,’’ the court 

of appeals found that the provider’s 

appeal was timely. The court held that 

the intermediary’s decision to review 

35742 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

the two disputed cost items during the 

course of its reopening was a revision 

within the meaning of the regulations, 

despite the fact that the intermediary 

did not revise the disallowances with 

respect to those items. The proposed 

language in paragraph (d) is intended to 

make clear that items that are within the 

scope of a reopening but are not revised, 

are not appealable through any revised 

determination issued after the 

reopening. See also proposed 

§ 405.1889. For example: An 

intermediary issues an NPR on March 1, 

2001. No timely appeal of the NPR is 

taken. On December 1, 2001 the 

intermediary notifies the provider that it 

intends to reopen the March 1, 2001 

NPR to examine cost issues A, B, and C. 

On June 1, 2001 the intermediary issues 

a revised NPR which addresses only 

cost issue C. The provider has 180 days 

from its receipt of the June 1, 2001 

revised NPR to appeal cost issue C 

(assuming the amount in controversy 

and dissatisfaction requirements are 

met); any appeal of cost issues A and/

or B would be untimely and would be 

disallowed, because issues A and B 

were not revised. 

We note that in Edgewater, the 

provider still had time to appeal the first 

NPR at the time that the intermediary 

issued its notice of reopening. The 

district court stated that the provider 

was unaware that the two cost items 

that it appealed (from the revised NPR) 

were not going to be revised until it 

received the revised NPR (at which time 

it was too late to appeal them from the 

original NPR). The court of appeals 

indicated that its decision may have in 

part been based on fairness concerns. 

We do not believe, however, that a 

provider should assume that cost items 

that have been reopened will 

necessarily be revised at all, or revised 

in a fully favorable way to the provider. 

3. Effect of a Revision; Issue-Specific 

Nature of Appeals of Revised 

Determinations and Decisions 

(§ 405.1889) 

We propose to change the title of 

§ 405.1889 and to make minor revisions 

to the language. Our proposed changes 

are intended to clarify our longstanding 

policy, which is expressed in current 

§ 405.1889 and which has been upheld 

by several courts, that the scope of 

appeal of a revised notice of amount of 

program reimbursement (NPR) or other 

revised determination or revised 

decision is limited to the specific 

revisions that were made in the revised 

determination or decision. That is, if the 

time to raise a matter through an appeal 

of the original determination or decision 

has expired, the matter may not be 

appealed through an appeal of a revised 

determination or decision if the matter 

has not been specifically revised in the 

revised determination or decision. (See, 

for example, Foothill Presbyterian Hosp.

v. Shalala, 152 F.3d 1132 (9th Cir. 

1998); HCA Health Servs. of Oklahoma, 

Inc. v. Shalala, 27 F.3d 614, 618 (D.C. 

Cir. 1994)). For example: After the time 

to appeal an NPR has expired, an 

intermediary reopens the NPR and 

issues a revised NPR, which reclassifies 

the provider’s malpractice insurance 

costs as administrative and general 

expenses not subject to the routine cost 

limits (RCL). The provider appeals the 

revised NPR to the Board, and 

challenges the methodology by which 

the RCL were calculated. Although the 

RCL were necessarily affected by the 

revised NPR, the revised NPR made no 

revision to the methodology for 

calculating the RCL; therefore the 

provider’s appeal is not within the 

scope of the revised NPR and the Board 

is without jurisdiction to hear the 

appeal. 

W. Three Additional Proposals Under 

Consideration

We are considering whether to amend 

our regulations to state the following. 

First, an ex parte contact with a Board 

staff member concerning a procedural 

matter in a case is not a prohibited ex 

parte communication. We believe this 

proposed position is consistent with 

how courts operate with respect to 

communications between one party’s 

attorney and the judge’s clerk or the 

court’s docket staff. We would also 

encourage counsel to keep such 

communications to a minimum and to 

notify promptly opposing counsel 

whenever such communications take 

place.

Second, upon receipt of a credible 

allegation that a party’s counsel has a 

conflict of interest in his or her 

representation of the party, the Board 

has the responsibility to order such 

party to show cause why a case should 

not be dismissed or why other 

appropriate action should not be taken. 

We believe that in order to maintain the 

integrity of the appeal process, a 

representative that has, or may have, 

obtained confidential information from 

one party while in that party’s employ 

should not represent another party 

whose interest is inimical to that of the 

first party. An allegation that a conflict 

of interest has occurred should not be 

made nor taken lightly. 

Third, where an intermediary denies 

reimbursement for a claimed item 

without auditing the reimbursement 

effect of such claim, and the 

intermediary’s denial is reversed by a 

decision of the Board, the Administrator 

or a court, which has become final and 

non-appealable, CMS may require the 

intermediary to determine the 

reimbursement effect of the claim prior 

to payment. (This position is similar to 

our proposal for § 405.1803(d), as 

previously stated, for the auditing of 

self-disallowed costs.) Similarly, where 

CMS or the intermediary denies 

reimbursement for an item on one basis 

and that determination is reversed, CMS 

or the intermediary should then have 

the opportunity to determine whether 

reimbursement should be allowed or 

whether reimbursement should be 

denied for any other reason. For 

example, if CMS were to deny a 

provider’s request for an exception to its 

ESRD payment rate on the basis that the 

request was not submitted timely, and if 

this determination were reversed by a 

court order that has become final and 

non-appealable, CMS would then 

determine whether the provider’s 

exception request is allowable — the 

exception request would not be granted 

simply because the court found that it 

was timely submitted. This latter 

proposal is consistent with our 

longstanding view and we believe it is 

appropriate in light of the need to 

conserve administrative resources. That 

is, we believe that it is potentially a 

waste of resources for a decision maker 

to consider all possible reasons why an 

item or request should not be allowed 

where the decision maker has a good 

faith belief that its determination is 

correct and that determination may 

never be challenged or, if it is 

challenged, may never be reversed. 

Issues relating to these proposals did 

not surface until very late in the 

development of this proposed rule. We 

did not wish to delay publication of the 

proposed rule, so we have not set forth 

specific regulatory text language for 

these proposals. Rather, we are 

providing the public with notice of the 

proposals and we invite comments on 

them. 

X. Technical Revisions 

1. Sections 413.30(c)(1), 413.30(c)(2), 

413.40(e)(5) 

These sections provide that the time 

required by CMS or the intermediary to 

review a request for an exception or 

exemption to the routine cost limits or 

a request for an adjustment to the rateof-increase ceiling for a hospital 

excluded from PPS is good cause for the 

granting of an extension of time in 

which to seek a Board hearing on an 

appeal of the intermediary’s NPR. We 

propose to revise the language to 

provide that the time in which to seek 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35743

an intermediary hearing under the 

above circumstances is also extended 

for good cause. We also propose to 

delete the references to § 405.1841 

(which we propose to delete) in these 

sections and replace them with 

references to proposed new § 405.1836. 

2. Section 413.64(j)(1) 

We propose to make minor, nonsubstantive wording changes and to 

replace the reference to § 405.1841 with 

a reference to § 405.1835. 

3. Sections 417.576, 417.810

As we explain above, we propose to 

revise § 405.1801(b)(2) to clarify the 

specific applicability of subpart R to 

non-provider entities. We believe the 

regulation is incomplete in stating that 

non-provider entities do not qualify for 

a Board hearing, because, under our 

longstanding policy, such entities 

cannot qualify for a Board hearing or an 

intermediary hearing because both types 

of hearings are available only to 

providers. Also as stated above, we 

believe that non-provider hearings 

before a CMS reviewing official are 

more analogous to a Board hearing than 

an intermediary hearing, and we 

propose to revise § 405.1801(b)(2) to 

state that if a hearing is available to a 

non-provider entity on an amount in 

controversy of at least $1,000, the 

procedural rules for a Board hearing 

under this subpart are applicable to the 

maximum extent possible. Accordingly, 

we also propose to revise 

§§ 417.576(d)(4), 417.810(c)(2) and 

417.810(d)(3) to substitute ‘‘a hearing in 

accordance with the procedural rules 

described in § 405.1801(b)(2)’’ in place 

of language that states or implies that a 

health maintenance organization (HMO) 

or competitive medical plan (CMP) has 

a right to a hearing in accordance with, 

or under, Subpart R. 

III. Collection of Information 

Requirements 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘Collection of Information 

Requirements’’ at the beginning of your 

comments.] 

Under the Paperwork Reduction Act 

(PRA) of 1995, we are required to 

provide 60-day notice in the Federal 

Register and solicit public comment 

before a collection of information 

requirement is submitted to the Office of 

Management and Budget (OMB) for 

review and approval. In order to fairly 

evaluate whether an information 

collection should be approved by OMB, 

section 3506(c)(2)(A) of the PRA of 1995 

requires that we solicit comment on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques.

For the purpose of discussion, below 

is a summary of the information 

collection requirements associated with 

the hearing process. Because these 

collection requirements are collected 

pursuant to an administration action 

and/or audit they are not subject to the 

PRA, as stipulated under 5 CFR 1320.4. 

Section 405.1811 Right to 

Intermediary Hearing; Contents of, and 

Adding Issues to, Hearing Request 

The provider’s request for an 

intermediary hearing must be submitted 

in writing to the intermediary, and the 

request must include specified 

information. 

After filing a hearing request in 

accordance with paragraphs (a) and (b) 

of this section, a provider may add 

specific Medicare payment issues to the 

original hearing request by submitting a 

written request to the intermediary 

hearing officer, only if certain 

conditions are met. 

The exempt burden associated with 

these requirements is the time it will 

take a provider to gather all the 

necessary information and to write the 

request for an intermediary hearing. The 

proposed regulation would not impose 

any new paperwork burdens on 

providers. It would merely require 

providers to prepare their requests in a 

more expedited fashion. Because most 

cost report disputes involve at least 

$10,000 and are therefore heard by the 

Board, only a handful of intermediary 

hearing requests are submitted annually 

by providers. 

Section 405.1835 Right to Board 

Hearing; Contents of, and Adding Issues 

to, Hearing Request 

The provider’s request for a Board 

hearing must be submitted in writing to 

the intermediary, and the request must 

include specified information. 

After filing a hearing request in 

accordance with paragraphs (a) and (b) 

of this section, a provider may add 

specific Medicare payment issues to the 

original hearing request by submitting a 

written request to the intermediary 

hearing officer, only if certain 

conditions are met. 

The exempt burden associated with 

these requirements is the time it will 

take a provider to gather all the 

necessary information and to write the 

request for a Board hearing. The 

proposed regulation would not impose 

any new paperwork burdens on 

providers. It would merely require 

providers to prepare their requests in a 

more expedited fashion. Generally 

speaking, appeal letters are two to five 

pages long and the time required to put 

together and mail the appeal letter is 

minimal. The number of requests for 

appeal received by the Board varies 

from year to year. For FY 2000, the 

Board received 4053 new appeals and in 

2003, the Board received 1675 new 

appeals. We welcome comments on this 

burden. 

Section 405.1837 Group Appeals 

The providers’ request for a group 

appeal must be submitted in writing to 

the Board, and the request must include 

specified information. A provider may 

be added to the group after requesting 

to do so in writing. 

The exempt burden associated with 

these requirements is the time it will 

take a group to gather all the necessary 

information and to write the request. In 

the last two years, an average of 325 

groups filed requests for Board hearings 

and each had to submit additional 

information. 

IV. Response To Comments 

Because of the large number of items 

of correspondence we normally receive 

on Federal Register documents 

published for comment, we are not able 

to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, if we proceed with 

a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

V. Regulatory Impact Statement 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Regulatory Impact Statement’’ at the 

beginning of your comments.] 

We have examined the impacts of this 

rule as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA), September 16, 

1980, Pub. L. 96–354), section 1102(b) of 

the Social Security Act, the Unfunded 

Mandates Reform Act of 1995, Pub. L. 

No. 104–4, and Executive Order 13132. 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

if regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

35744 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any one year). This rule does not 

reach the economic threshold and thus 

is not considered a major rule.

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations and government 

agencies. Most hospitals and most other 

providers and suppliers are small 

entities, either by nonprofit status or by 

having revenues of $6 million to $29 

million in any one year. Individuals and 

States are not included in the definition 

of a small entity. We are not preparing 

an analysis for the RFA because we have 

determined, and we certify, that this 

rule will not have a significant 

economic impact on a substantial 

number of small entities. The only 

burden attached to this proposed rule is 

the information collection burden 

associated with filing a request for an 

intermediary or PRRB hearing. As we 

have described in section III of this 

preamble, the proposed rule does not 

impose any new paperwork burdens on 

providers. It merely proposes requiring 

providers to prepare their hearing 

requests in a more expedited fashion. 

Moreover, the proposed rule would 

lessen the time it takes small entities to 

pursue appeals and receive decisions. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. We are not 

preparing analyses for section 1102(b) of 

the Act because we have determined, 

and we certify, that this rule would not 

have a significant impact on the 

operations of a substantial number of 

small rural hospitals. Again, the only 

impact on small rural hospitals would 

be the potential increase in the amount 

of time a provider would need to file a 

request for an intermediary or PRRB 

hearing. However, as we described in 

section III of this preamble, the 

proposed rule does not impose any new 

paperwork burdens on providers. It 

merely proposes requiring providers to 

prepare their hearing requests in a more 

expedited fashion. Moreover, the 

proposed rule would lessen the time it 

takes rural hospitals to pursue appeals 

and receive decisions. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that may result in expenditure in 

any one year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $110 million. This rule 

will have no consequential effect on the 

governments mentioned or on the 

private sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

Because this regulation does not impose 

any costs on State or local governments, 

the requirements of E.O. 13132 are not 

applicable. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget.

List of Subjects 

42 CFR Part 405

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medicare, 

Reporting and recordkeeping 

requirements, Rural areas, X-rays. 

42 CFR Part 413

Health facilities, Kidney diseases, 

Medicare, Puerto Rico, Reporting and 

recordkeeping requirements. 

42 CFR Part 417

Administrative practice and 

procedure, Grant programs—health, 

Health care, Health insurance, Health 

maintenance organizations (HMO), Loan 

programs—health, Medicare, Reporting 

and recordkeeping requirements.

For the reasons set forth in the 

preamble, 42 CFR chapter IV would be 

amended as set forth below:

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED

Subpart R—Provider Reimbursement 

Determinations and Appeals 

1. The authority citation for part 405, 

subpart R continues to read as follows:

Authority: Secs. 205, 1102, 1814(b), 

1815(a), 1833, 1861(v), 1871, 1872, 1878, and 

1886 of the Social Security Act (42 U.S.C. 

405, 1302, 1395f(b), 1395g(a), 1395l, 

1395x(v), 1395hh, 1395ii, 1395oo, and 

1395ww).

2. Section 405.1801 is amended to 

read as follows: 

A. In paragraph (a), remove the words 

‘‘Administrator’s review’’ and add in 

their place, the words ‘‘Administrator 

review’’; the terms ‘‘date of filing’’ and 

‘‘date of submission of materials’’ are 

removed; and the definition for the term 

‘‘date of receipt’’ is revised; definitions 

for ‘‘CMS reviewing official’’, ‘‘CMS 

reviewing official procedure’’, 

‘‘intermediary hearing officer(s)’’, and 

‘‘reviewing entity’’ are added in 

alphabetical order. 

B. Paragraph (b) is revised. 

C. A new paragraph (d) is added. 

The revisions and additions read as 

follows:

§ 405.1801 Introduction. 

(a) Definitions. * * *

* * * * *

CMS reviewing official means the 

reviewing official provided for in 

§ 405.1834. 

CMS reviewing official procedure

means the review provided for in 

§ 405.1834.

* * * * *

Date of receipt means the date a 

document or other material is received 

by: (1) A party or an affected non-party, 

such as CMS, involved in proceedings 

before a reviewing entity; or (2) a 

reviewing entity. The date of receipt by 

a party or affected nonparty involved in 

proceedings before a reviewing entity is 

presumed to be 5 days after the date of 

issuance of an intermediary notice or a 

reviewing entity document, or 5 days 

after the date of submission of material 

to a reviewing entity, as applicable, 

unless it is established by a 

preponderance of the evidence that the 

intermediary notice, reviewing entity 

document, or submitted material was 

actually received on a later date. As 

applied to a provider, the phrase ‘‘date 

of receipt’’ in this definition is 

synonymous with the term ‘‘notice,’’ as 

that term is used in section 1878 of the 

Act and in this subpart. 

The date of receipt by a reviewing 

entity is presumed as the date stamped 

by the reviewing entity ‘‘Received’’ on 

the document or other submitted 

material, unless it is established by a 

preponderance of the evidence that the 

document or other material was actually 

received on a different date. For 

purposes of an intermediary hearing, if 

no intermediary hearing officer is 

appointed (or none is currently 

presiding), the date of receipt of an 

intermediary hearing request (or other 

material pertaining to the request) is 

presumed to be the date stamped 

‘‘Received’’ on the material by the 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35745

intermediary, unless it is established by 

a preponderance of the evidence that 

the document or other material was 

actually received on a different date. 

The date of receipt of a document or 

other material by a CMS reviewing 

official or the CMS Administrator is 

presumed to be the date stamped 

‘‘Received’’ on the material by the Office 

of the Attorney Advisor, unless it is 

established by a preponderance of the 

evidence that the document or other 

material was actually received on a 

different date. 

Intermediary hearing officer(s) means 

the hearing officer or panel of hearing 

officers provided for in § 405.1817.

* * * * *

Reviewing entity means the 

intermediary hearing officer(s), a CMS 

reviewing official, the Board, or the 

Administrator. 

(b) General rules—(1) Providers. In 

order to be paid for covered services 

furnished to Medicare beneficiaries, a 

provider must file a cost report with its 

intermediary as specified in § 413.24(f) 

of this chapter. For purposes of this 

subpart, the term ‘‘provider’’ includes a 

hospital (see part 482 of this chapter), 

hospice program (see § 418.3 of this 

chapter), critical access hospital (CAH), 

comprehensive outpatient rehabilitation 

facility (CORF), renal dialysis facility, 

Federally qualified health center 

(FQHC), home health agency (HHA), 

rural health clinic (RHC), skilled 

nursing facility (SNF), and any other 

entity included under the Act. (FQHCs 

and RHCs are providers, for purposes of 

this subpart, effective with cost 

reporting periods beginning on or after 

October 1, 1991). 

(2) Other non-provider entities 

participating in Medicare Part A. 

(i) In addition to providers of services, 

there are other entities such as health 

maintenance organizations (HMOs) and 

competitive medical plans (CMPs) (see 

§ 400.200 of this chapter) that may 

participate in the Medicare program but 

do not qualify as providers under the 

Act or this subpart. 

(ii) Some of these non-provider 

entities are required to file periodic cost 

reports and are paid on the basis of 

information furnished in these reports. 

These non-provider entities may not 

obtain an intermediary hearing or a 

Board hearing under the Act or this 

subpart. 

(iii) Some other hearing may be 

available to these non-provider entities, 

if the amount in controversy is at least 

$1,000. 

(iv) For any non-provider hearing, the 

procedural rules for a Board hearing set 

forth in this subpart are applicable to 

the maximum extent possible.

* * * * *

(d) Calculating time periods and 

deadlines. In computing any period of 

time or deadline prescribed or allowed 

under this subpart or authorized by a 

reviewing entity: 

(1) The day of the act, event, or 

default from which the designated time 

period begins to run is not included. 

(2) Each succeeding calendar day is 

included in the designated time period, 

except that, in calculating a designated 

period of time for an act by a reviewing 

entity, a day is not included where the 

reviewing entity is unable to conduct 

business in the usual manner due to 

extraordinary circumstances beyond its 

control such as natural or other 

catastrophe, weather conditions, fire, or 

furlough. In that case, the designated 

time period resumes when the 

reviewing entity is again able to conduct 

business in the usual manner.

(3) The last day of the designated time 

period is included unless it is a 

Saturday, a Sunday, a Federal legal 

holiday (as enumerated in Rule 6(a) of 

the Federal Rules of Civil Procedure), 

or, in the case of a deadline for receipt 

by a reviewing entity (see § 405.1801(a)), 

a day when the reviewing entity is 

unable to conduct business in the usual 

manner due to extraordinary 

circumstances beyond its control such 

as natural or other catastrophe, weather 

conditions, fire, or furlough. In that 

case, the designated time period 

continues to run until the end of the 

next day which is not one of the 

aforementioned days. 

(4) For purposes of paragraph (d) of 

this section, the reviewing entity is 

deemed to—

(i) Be the intermediary, if the 

intermediary hearing officer(s) is not yet 

appointed (or none is currently 

presiding); and 

(ii) Include the Office of the Attorney 

Advisor. 

3. Section 405.1803 is amended to 

read as follows: 

A. In the first sentence of paragraph 

(a) introductory text, remove the citation 

‘‘(see § 405.1835(b))’’ and add in its 

place ‘‘(see § 405.1835(a)(3)(ii))’’; 

B. In the second sentence of 

paragraph (b), remove the phrase ‘‘after 

the date of the notice.’’ and add in its 

place ‘‘after the date of receipt of the 

notice.’’; 

C. A new paragraph (d) is added to 

read as follows:

§ 405.1803 Intermediary determination and 

notice of amount of program 

reimbursement.

* * * * *

(d) Effect of certain final agency 

decisions and final court judgments; 

audits of self-disallowed items. 

(1) This paragraph applies to the 

following administrative decisions and 

court judgments: 

(i) A final hearing decision by the 

intermediary (see § 405.1833) or the 

Board (see § 405.1871(b)). 

(ii) A final decision by a CMS 

reviewing official (see § 405.1834(f)(1)) 

or the Administrator (see 

§ 405.1875(e)(4)) following review of a 

hearing decision by the intermediary or 

the Board, respectively. 

(iii) A final, non-appealable judgment 

by a court on a Medicare reimbursement 

issue that the court rendered in 

accordance to jurisdiction under section 

1878 of the Act (see § 405.1842 and 

§ 405.1877). 

(2) For any final agency decision or 

final court judgment specified in 

paragraph (d)(1) of this section, the 

intermediary must promptly, upon 

notification from CMS: 

(i) Determine the effect of the final 

decision or judgment on the 

intermediary determination for the cost 

reporting period at issue in the decision 

or judgment. 

(ii) Issue any revised intermediary 

determination, and make any additional 

program payment, or recoup or offset 

any program payment (see § 405.371), 

for the period that may be necessary to 

implement the final decision or 

judgment on the specific matters at 

issue in the decision or judgment. 

(3) CMS may require the intermediary 

to audit any self-disallowed item at 

issue in an appeal or a civil action 

before any revised intermediary 

determination or additional Medicare 

payment, recoupment, or offset may be 

determined for an item under paragraph 

(d)(2) of this section. 

(4) For any final settlement 

agreement, whether for an appeal to the 

intermediary hearing officer(s) or the 

Board or for a civil action before a court, 

the intermediary must implement the 

settlement agreement in accordance 

with paragraphs (d)(2) and (d)(3) of this 

section, unless a particular 

administrative or judicial settlement 

agreement provides otherwise.

4. Section 405.1811 is revised to read 

as follows:

§ 405.1811 Right to intermediary hearing; 

contents of, and adding issues to, hearing 

request. 

(a) Criteria. A provider (but no other 

individual, entity, or party) has a right 

to an intermediary hearing, as a single 

provider appeal, for specific items 

claimed for a cost reporting period 

covered by an intermediary or Secretary 

35746 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

determination for the period, but only 

if—

(1) The provider has preserved its 

right to claim dissatisfaction with the 

amount of Medicare payment for the 

specific item(s) at issue, by either: 

(i) Including a claim for a specific 

item(s) on its cost report for a period if 

the provider seeks payment that it 

believes to be in accordance with 

Medicare policy; or 

(ii) Self-disallowing a specific item(s) 

by following the applicable procedures 

for filing a cost report under protest, if 

the provider seeks payment that it 

believes may not be allowable or may 

not be in accordance with Medicare 

policy (for example, if the intermediary 

lacks discretion to award the 

reimbursement the provider seeks for 

the item(s)). 

(2) The amount in controversy (as 

determined in accordance with 

§ 405.1839) is at least $1,000 but less 

than $10,000; and 

(3) Unless the provider qualifies for a 

good cause extension under § 405.1813, 

the date of receipt by the intermediary 

of the provider’s hearing request must 

be—

(i) No later than 180 days after the 

date of receipt by the provider of the 

intermediary or Secretary 

determination; or 

(ii) Where the intermediary 

determination is not issued (through no 

fault of the provider) within 12 months 

of the date of receipt by the 

intermediary of the provider’s perfected 

cost report or amended cost report (as 

specified in § 413.24(f) of this chapter), 

no later than 180 days after the 

expiration of the 12-month period for 

issuance of the intermediary 

determination. The date of receipt by 

the intermediary of the provider’s 

perfected cost report or amended cost 

report is presumed to be the date the 

intermediary stamped ‘‘Received’’

unless it is shown by a preponderance 

of the evidence that the intermediary 

received the cost report on an earlier 

date. 

(b) Contents of request for an 

intermediary hearing. The provider’s 

request for an intermediary hearing 

must be submitted in writing to the 

intermediary, and the request must 

include: 

(1) A demonstration that the provider 

satisfies the requirements for an 

intermediary hearing as specified in 

paragraph (a) of this section, including 

a specific identification of the 

intermediary or Secretary determination 

under appeal. 

(2) An explanation, for each specific 

item at issue (see § 405.1811(a)(1)), of 

the provider’s dissatisfaction with the 

intermediary or Secretary determination 

under appeal, including an account of: 

(i) Why the provider believes 

Medicare payment is incorrect for each 

disputed item. 

(ii) How and why the provider 

believes Medicare payment should be 

determined differently for each disputed 

item. 

(iii) Where the provider self-disallows 

a specific item, a description of the 

nature and amount of each selfdisallowed item and the reimbursement 

sought for any item. 

(3) A copy of the intermediary or 

Secretary determination under appeal, 

and any other documentary evidence 

the provider considers necessary to 

satisfy the hearing request requirements 

of paragraphs (b)(1) and (b)(2) of this 

section.

(c) Adding issues to the hearing 

request. After filing a hearing request in 

accordance with paragraphs (a) and (b) 

of this section, a provider may add 

specific Medicare payment issues to the 

original hearing request by submitting a 

written request to the intermediary 

hearing officer, only if: 

(1) A hearing request to add issues 

complies with the requirements of 

paragraphs (a)(1) and (b) of this section 

as to each new issue. 

(2) The specific matters at issue raised 

in the initial hearing request and the 

matters identified in subsequent 

requests to add issues, when combined, 

satisfy the requirements of paragraph 

(a)(2) of this section. 

(3) The intermediary hearing officer 

receives the request to add issues no 

later than 60 days after the expiration of 

the applicable 180-day period 

prescribed in paragraph (a)(3) of this 

section. 

5. Section 405.1813 is revised to read 

as follows:

§ 405.1813 Good cause extension of time 

limit for requesting an intermediary hearing. 

(a) A request for an intermediary 

hearing that is received by the 

intermediary after the applicable 180-

day time limit prescribed in 

§ 405.1811(a)(3) must be dismissed by 

the intermediary hearing officer(s), 

except the hearing officer(s) may extend 

the time limit upon a good cause 

showing by the provider. 

(b) The intermediary hearing officer(s) 

may find good cause to extend the time 

limit only if the provider demonstrates 

in writing it could not reasonably have 

been expected to file timely due to 

extraordinary circumstances beyond its 

control such as a natural or other 

catastrophe, fire, or strike, and the 

provider’s written request for an 

extension is received by the 

intermediary hearing officer(s) within a 

reasonable time (as determined by the 

intermediary hearing officer(s) under 

the circumstances) after the expiration 

of the applicable 180-day limit 

prescribed in § 405.1811(a)(3). 

(c) The intermediary hearing officer(s) 

may not grant a request for an extension 

under this section if—

(1) The provider relies on a change in 

the law, regulations, CMS Rulings, or 

general CMS instructions (whether 

based on a court decision or otherwise) 

or a CMS administrative ruling or policy 

as the basis for the extension request; or 

(2) The date of receipt by the 

intermediary of the provider’s extension 

request is later than 3 years after the 

date of the intermediary or other 

determination that the provider seeks to 

appeal. 

(d) If an extension request is granted 

or denied under this section, the 

intermediary hearing officer(s) must 

give prompt written notice to the 

provider, and mail a copy to each party 

to the appeal. The notice must include 

an explanation of the reasons for the 

decision by the hearing officer(s) and 

the facts underlying the decision. 

(e)(1) A decision denying an 

extension request under this section and 

dismissing the appeal is final and 

binding on the provider unless the 

dismissal decision is reviewed by a 

CMS reviewing official in accordance 

with § 405.1834(b)(2)(i) or reopened by 

the intermediary hearing officer(s) in 

accordance with § 405.1885 through 

§ 405.1889. The intermediary hearing 

officer(s) will promptly mail the 

decision to CMS’ Office Hearings (see 

§ 405.1834(b)(4)). 

(2) A decision granting an extension 

request under this section is not subject 

to immediate review by a CMS 

reviewing official (see § 405.1834(b)(3)). 

Any decision may be examined during 

the course of CMS review of a final 

jurisdictional dismissal decision or a 

final hearing decision by the 

intermediary hearing officer(s) (see 

§ 405.1834(b)(2)(i) and (ii)).

6. A new section 405.1814 is added to 

read as follows:

§ 405.1814 Intermediary hearing officer 

jurisdiction. 

(a) General rules. (1) After a request 

for an intermediary hearing is filed 

under § 405.1811, the intermediary 

hearing officer(s) must: 

(i) Determine in accordance with 

paragraph (b) of this section, whether it 

has jurisdiction to grant a hearing on 

each of the specific matters at issue in 

the hearing request. 

(ii) Make a preliminary determination 

of the scope of its jurisdiction, if any, 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35747

over the matters at issue in the appeal, 

and notify the parties of its specific 

jurisdictional findings, before 

conducting any of the following 

proceedings: 

(A) Determining its authority to 

decide a legal question relevant to a 

matter at issue (see § 405.1829); 

(B) Permitting discovery (see 

§ 405.1821); or conducting a hearing 

(see § 405.1819); 

(C) May revise a preliminary 

jurisdictional finding at any subsequent 

stage of the proceedings in an appeal, 

and it must promptly notify the parties 

of the revised findings. 

(2) Under paragraph (c)(1) of this 

section, each intermediary hearing 

decision (see § 405.1831) must include a 

final jurisdictional finding for each 

specific matter at issue in the appeal. 

(3) If the hearing officer(s) finally 

determines it lacks jurisdiction over 

every specific matter at issue in the 

appeal, it issues a jurisdictional 

dismissal decision under paragraph 

(c)(2) of this section. 

(4) Final jurisdictional findings and 

jurisdictional dismissal decisions by the 

hearing officer(s) are subject to the CMS 

reviewing official procedure in 

accordance with paragraph (d) of this 

section and § 405.1834(b)(2)(i) and 

(b)(2)(ii). 

(b) Criteria. Except for the amount in 

controversy requirement, the 

jurisdiction of the intermediary hearing 

officer(s) to grant a hearing is 

determined separately for each specific 

matter at issue in the intermediary or 

Secretary determination for the cost 

reporting period under appeal. The 

hearing officer(s) has jurisdiction to 

grant a hearing over a specific matter at 

issue in an appeal only if the provider 

has a right to an intermediary hearing 

under § 405.1811. Certain matters at 

issue are removed from the jurisdiction 

of the intermediary hearing officer(s); 

these matters include, but are not 

limited to, the following: 

(1) A finding in an intermediary 

determination that no payment be made 

under title XVIII of the Act for expenses 

incurred for items and services 

furnished to an individual because 

those items and services are excluded 

from coverage under section 1862 of the 

Act, 42 U.S.C. 1395y, and the 

regulations at 42 CFR, Part 411 (the 

finding may be reviewed only in 

accordance with the applicable 

provisions of section 1869 of the Act, 

and of subpart G or H of part 405). 

(2) Certain matters affecting payments 

to hospitals under the prospective 

payment system, as provided in 

§ 405.1804. 

(3) Any self-disallowed item except as 

permitted in § 405.1811(a)(1)(ii). 

(c) Final jurisdictional findings and 

jurisdictional dismissal decisions by 

intermediary hearing officer(s). 

(1) In issuing a hearing decision under 

§ 405.1831, the intermediary hearing 

officer(s) must make a final 

determination of its jurisdiction, or lack 

thereof, for each specific matter at issue 

in the hearing decision. Each 

intermediary hearing decision must 

include specific findings of fact and 

conclusions of law as to the jurisdiction 

of the hearing officer(s), or lack thereof, 

to grant a hearing on each matter at 

issue in the appeal. 

(2) If the hearing officer(s) finally 

determines it lacks jurisdiction to grant 

a hearing for every specific matter at 

issue in an appeal, it must issue a 

jurisdictional dismissal decision 

dismissing the appeal for lack of 

jurisdiction. Each jurisdictional 

dismissal decision by the hearing 

officer(s) must include specific findings 

of fact and conclusions of law 

explaining the determination that there 

is no jurisdiction to grant a hearing on 

each matter at issue in the appeal. A 

copy of the jurisdictional dismissal 

decision must be mailed promptly to 

each party to the appeal (see § 405.1815) 

and to CMS’ Office of Hearings (see 

§ 405.1834(b)(4)). 

(3) A jurisdictional dismissal decision 

by the intermediary hearing officer(s) 

under paragraph (c)(2) of this section is 

final and binding on the parties unless 

the decision is reviewed by a CMS 

reviewing official in accordance with 

§ 405.1834 or reopened by the 

intermediary hearing officer(s) in 

accordance with §§ 405.1885 through 

405.1889.

(d) CMS reviewing official procedure. 

Any finding by the intermediary hearing 

officer(s) as to whether it has 

jurisdiction to grant a hearing on a 

specific matter at issue in an appeal is 

not subject to immediate review by a 

CMS reviewing official, except as 

provided in this paragraph (see 

§ 405.1834(b)(3)). A CMS reviewing 

official may review under 

§ 405.1834(b)(2)(ii) or (b)(2)(iii) the final 

jurisdictional findings of the 

intermediary hearing officer(s) as to 

specific matters at issue in an appeal, 

provided these findings are included in 

a jurisdictional dismissal decision 

under paragraph (c)(2) of this section or 

a hearing decision (see § 405.1831) by 

the intermediary hearing officer(s). 

7. Section 405.1815 is revised to read 

as follows:

§ 405.1815 Parties to proceedings before 

the intermediary hearing officer(s). 

When a provider files a request for an 

intermediary hearing in accordance 

with § 405.1811, the parties to all 

proceedings before the intermediary 

hearing officer(s) are the provider and, 

if applicable, any other entity found by 

the intermediary to be a related 

organization of the provider under 

§ 413.17 of this chapter. The parties 

must be given reasonable notice of the 

time, date, and place of any 

intermediary hearing. Neither the 

intermediary nor CMS may be made a 

party to proceedings before the 

intermediary hearing officer(s). 

8. Section 405.1821 is revised to read 

as follows:

§ 405.1821 Prehearing discovery and other 

proceedings prior to the intermediary 

hearing. 

(a) Discovery rule; time limits. (1) 

Limited prehearing discovery may be 

permitted by the intermediary hearing 

officer(s) upon request of a party, 

provided the request is timely and the 

hearing officer(s) makes a preliminary 

finding of its jurisdiction over the 

matters at issue in accordance with 

§ 405.1814(a). 

(2) A prehearing discovery request is 

timely if the date of receipt of the 

request by another party, or non-party, 

as applicable, is no later than 90 days 

before the scheduled starting date of the 

intermediary hearing, unless the 

intermediary hearing officer(s) extend 

the time upon request of the party and 

upon a showing of good cause. 

(3) Discovery may not be authorized 

by the hearing officer(s) or conducted by 

a party any later than 45 days before the 

scheduled starting date of the 

intermediary hearing unless the hearing 

officer(s) find, at the request of the 

party, good cause to extend the period 

for discovery.

(4) Before ruling on a request to 

extend the time for requesting discovery 

or for conducting discovery, the hearing 

officer(s) must give the other parties to 

the appeal and any non-party subject to 

a discovery request a reasonable period 

to respond to the extension request. 

(5) The hearing officer(s) may extend 

the time in which to request discovery 

or conduct discovery only if the 

requesting party establishes that it was 

not dilatory or otherwise at fault in not 

meeting the original discovery deadline. 

(6) If the extension request is granted, 

the hearing officer(s) must impose a new 

deadline and, if necessary, reschedule 

the hearing date so that all discovery 

ends no later than 45 days before the 

hearing. 

35748 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

(b) Discovery criteria—(1) General 

rule. The intermediary hearing officer(s) 

may permit discovery of a matter that is 

relevant to the specific subject matter of 

the intermediary hearing, provided the 

matter is not privileged or otherwise 

protected from disclosure and the 

discovery request is not unreasonable, 

unduly burdensome or expensive, or 

otherwise inappropriate. In determining 

whether to permit discovery and in 

fixing the scope and limits of any 

discovery, the hearing officer(s) uses the 

Federal Rules of Civil Procedure and 

Rules 401 and 501 of the Federal Rules 

of Evidence for guidance. 

(2) Limitations on discovery. Any 

discovery before the intermediary 

hearing officer(s) is limited as follows: 

(i) A party may request of another 

party or a non-party the reasonable 

production of documents for inspection 

and copying, and may propound a 

reasonable number of written 

interrogatories. 

(ii) A party may not request 

admissions, take oral or written 

depositions, or take any other form of 

discovery not permitted under this 

section. 

(c) Discovery procedures; rights of 

non-parties; motions to compel or for 

protective order. (1) A party may request 

discovery of another party to the 

proceedings before the intermediary 

hearing officer(s) or of a non-party to the 

proceedings. Any discovery request 

filed with the intermediary hearing 

officer(s) must be mailed promptly to 

the party or non-party from which the 

discovery is requested, and to any other 

party to the intermediary hearing (see 

§ 405.1815). 

(2) If a discovery request is made of 

a non-party to the intermediary hearing, 

the non-party (including HHS and CMS) 

has the same rights as any party has in 

responding to a discovery request. 

These rights include, but are not limited 

to, the right to select and use any 

attorney or other representative, and to 

submit discovery responses, objections, 

or motions to the hearing officer(s). 

(3) Each party is required to make a 

good faith effort to resolve or narrow 

any discovery dispute, regardless of 

whether the dispute is with another 

party or a non-party. 

(i) A party may submit to the 

intermediary hearing officer(s) a motion 

to compel discovery that is permitted 

under this section, and a motion for a 

protective order regarding any discovery 

request may be submitted to the hearing 

officer(s) by a party or non-party. 

(ii) Any motion to compel or for 

protective order must include a selfsworn declaration describing the 

movant’s efforts to resolve or narrow the 

discovery dispute. The declaration also 

must be included with any response to 

a motion to compel or for a protective 

order. 

(iii) The hearing officer(s) must—

(A) Decide the motion in accordance 

with this section and any prior 

discovery ruling; and

(B) Issue and mail to each party and 

any affected non-party a discovery 

ruling that grants or denies the motion 

to compel or for protective order in 

whole or in part; if applicable, the 

discovery ruling must specifically 

identify any part of the disputed 

discovery request upheld and any part 

rejected, and impose any limits on 

discovery the hearing officer(s) find 

necessary and appropriate. 

(d) Reviewability of discovery or 

disclosure rulings—

(1) General rule. A discovery ruling 

issued in accordance with paragraph 

(c)(3) of this section, or a disclosure 

ruling (such as one issued at a hearing), 

is not subject to immediate review by a 

CMS official (see § 405.1834(b)(3)). A 

discovery ruling may be examined 

solely during the course of CMS review 

under § 405.1834 of a jurisdictional 

dismissal decision (see § 405.1814(c)(2)) 

or a hearing decision (see § 405.1831) by 

the intermediary hearing officer(s). 

(2) Exception. To the extent a ruling 

authorizes discovery or disclosure of a 

matter for which an objection based on 

privilege or other protection from 

disclosure was made before the 

intermediary hearing officer(s), that 

portion of the discovery or disclosure 

ruling may immediately be reviewed by 

a CMS reviewing official in accordance 

with § 405.1834(b)(3). Upon notice to 

the intermediary hearing officer that the 

provider intends to seek immediate 

review of a ruling, or that the 

intermediary intends to suggest that the 

Administrator take own motion review 

of the ruling, the intermediary hearing 

officer stays all proceedings affected by 

the ruling. The intermediary hearing 

officer under the circumstances of a 

given case must determine the length of 

any stay, but in no event must be less 

than 10 days. If the Administrator grants 

a request for review, or takes own 

motion review, of a ruling, the ruling is 

stayed until the time as the CMS 

reviewing official issues a written 

decision that affirms, reverses, modifies, 

or remands the intermediary hearing 

officer’s ruling. If the Administrator 

does not grant review or take own 

motion review within the time allotted 

for the stay, the stay is lifted and the 

ruling stands. 

(e) Prehearing conference. The 

intermediary hearing officer(s) has 

discretion to schedule a prehearing 

conference. A prehearing conference 

may be conducted in person or 

telephonically, at the discretion of the 

intermediary hearing officer(s). When a 

panel of intermediary hearing officers is 

designated, the panel may appoint one 

or more hearing officers to act for the 

panel for any prehearing conference or 

any matter addressed at the conference.

9. Section 405.1827 is revised to read 

as follows:

§ 405.1827 Record of proceedings before 

the intermediary hearing officer(s). 

(a) The intermediary hearing officer(s) 

must maintain a complete record of all 

proceedings in an appeal. 

(b) The record consists of all 

documents and any other tangible 

materials timely submitted to the 

hearing officer(s) by the parties to the 

appeal and by any non-party (see 

§ 405.1821(c)), along with all 

correspondence, rulings, orders, and 

decisions (including the final decision) 

issued by the hearing officer(s). 

(c) The record must include a 

complete transcription of the 

proceedings at any intermediary 

hearing. 

(b) A copy of the transcription must 

be made available to any party upon 

request. 

10. Section 405.1829 is amended to 

read as follows: 

A. In paragraph (a), remove the 

parenthetical phrase ‘‘(see 42 CFR 

401.108),’’ and add, in its place, ‘‘(see 

401.108 of this chapter for a description 

of CMS Rulings),’’; 

B. The section heading and paragraph 

(b) are revised to read as follows:

§ 405.1829 Scope of authority of 

intermediary hearing officer(s).

* * * * *

(b)(1) If the intermediary hearing 

officer(s) has jurisdiction to conduct a 

hearing on the specific matters at issue 

under § 405.1811, and the legal 

authority to fully resolve the matters in 

a hearing decision (see § 405.1831), the 

hearing officer(s) must affirm, modify, 

or reverse the intermediary’s findings on 

each specific matter at issue in the 

intermediary or Secretary determination 

for the cost year under appeal. 

(2) The intermediary hearing officer(s) 

also may make additional revisions on 

specific matters regardless of whether 

the intermediary considered the matters 

in issuing the intermediary 

determination for the cost year, 

provided the hearing officer(s) does not 

consider or decide any specific matter 

for which it lacks jurisdiction (see 

§ 405.1814(b)) or which was not timely 

raised in the provider’s hearing request. 

(3) The authority of the intermediary 

hearing officer(s) under this paragraph 

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to make the additional revisions is 

limited to those revisions necessary to 

fully resolve a specific matter at issue 

if—

(i) The hearing officer(s) has 

jurisdiction to grant a hearing on the 

specific matter under § 405.1811 and 

§ 405.1814; and 

(ii) The specific matter was timely 

raised in an initial request for an 

intermediary hearing filed in 

accordance with § 405.1811(b) or in a 

timely request to add issues to an appeal 

submitted in accordance with 

§ 405.1811(c). 

11. Section 405.1831 is revised to read 

as follows:

§ 405.1831 Intermediary hearing decision. 

(a) If the intermediary hearing 

officer(s) finds jurisdiction and 

conducts a hearing (see § 405.1814(a)) 

the hearing officer(s) must promptly 

issue a written hearing decision. 

(b) The intermediary hearing decision 

must be based on the evidence from the 

intermediary hearing (see § 405.1823) 

and other evidence as may be included 

in the record (see § 405.1827). 

(c) The decision must include 

findings of fact and conclusions of law 

on jurisdictional issues (see 

§ 405.1814(c)(1)) and on the merits of 

the provider’s reimbursement claims, 

and include appropriate citations to the 

record evidence and to the applicable 

law, regulations, CMS Rulings, and 

general CMS instructions.

(d) A copy of the decision must be 

mailed promptly to each party and to 

CMS’s Office of Hearings (see 

§ 405.1834(b)(4)). 

12. Section 405.1833 is revised to read 

as follows:

§ 405.1833 Effect of intermediary hearing 

decision. 

An intermediary hearing decision 

issued in accordance with § 405.1831 is 

final and binding on all parties to the 

intermediary hearing and the 

intermediary unless the hearing 

decision is reviewed by a CMS 

reviewing official in accordance with 

§ 405.1834 or reopened by the 

intermediary hearing officer(s) in 

accordance with § 405.1885 through 

§ 405.1889. Final intermediary hearing 

decisions are subject to the provisions of 

§ 405.1803(d). 

13. A new section 405.1834 is added 

to read as follows:

§ 405.1834 CMS reviewing official 

procedure. 

(a) Scope. A provider that is a party 

to, and dissatisfied with, a final decision 

by the intermediary hearing officer(s) 

may request further administrative 

review of a decision, or the decision 

may be reviewed at the discretion of the 

Administrator. No other individual, 

entity, or party has the right to the 

review. The review is conducted on 

behalf of the Administrator by a 

designated CMS reviewing official who 

considers whether the decision of the 

intermediary hearing officer(s) is 

consistent with the law and the 

evidence in the record. Based on the 

review, the CMS reviewing official 

issues a decision on behalf of the 

Administrator. 

(b) General rules. (1) A CMS 

reviewing official may immediately 

review any final decision of the 

intermediary hearing officer(s) as 

specified in paragraph (b)(2) of this 

section; and non-final decisions and 

other non-final actions by the 

intermediary hearing officer(s) are not 

immediately reviewable, except as 

provided in paragraph (b)(3) of this 

section. The Administrator may exercise 

this review authority in response to a 

request from a provider party to the 

appeal or at his or her discretion. 

(2) A CMS reviewing official may 

immediately review: 

(i) Any final jurisdictional dismissal 

decision by the intermediary hearing 

officer(s), including any finding that the 

provider failed to demonstrate good 

cause for extending the time in which 

to request a hearing (see § 405.1813(e)(1) 

and § 405.1814(c)(3)); and 

(ii) Any final intermediary hearing 

decision (see § 405.1831). 

(3) Non-final decisions and other nonfinal actions by the intermediary 

hearing officer(s) are not subject to the 

CMS reviewing official procedure until 

the intermediary hearing officer(s) 

issues a final decision as specified in 

paragraph (b)(2) of this section (see 

§ 405.1813(e)(2), § 405.1814(d), and 

§ 405.1821(d)(1)), except a CMS 

reviewing official may, but is not 

required to, immediately review any 

intermediary hearing officer ruling 

(including a ruling made during the 

course of the hearing) authorizing 

discovery or disclosure of a matter for 

which an objection was made based on 

privilege or other protection from 

disclosure such as case preparation, 

confidentiality, or undue burden (see 

§ 405.1821(d)(2)). 

(4) In order to facilitate the 

Administrator’s exercise of this review 

authority, the intermediary hearing 

officer(s) must promptly send copies of 

any decision specified in paragraph 

(a)(2) of this section or § 405.1821(d)(2) 

to CMS’s Office of Hearings. 

(i) All requests for review by a CMS 

reviewing official and all written 

submissions to a CMS reviewing official 

under paragraphs (c) and (d) of this 

section also must be sent to CMS’’

Office of Hearings.

(ii) The Office of Hearings examines 

each intermediary hearing officer 

decision that is reviewable under 

paragraph (b)(2) of this section or 

§ 405.1821(d)(2), along with any review 

requests and any other submissions 

made by a party in accordance with the 

provisions of this section, in order to 

assist the Administrator’s exercise of 

this review authority. 

(c) Request for review. (1) A provider’s 

request for review by a CMS reviewing 

official is granted if: 

(i) The date of receipt by the Office of 

Hearings of the review request is no 

later than 60 days after the date of 

receipt by the provider of the 

intermediary hearing officer decision. 

(ii) The request seeks review of a 

decision listed in paragraph (b)(2) of 

this section, and the provider complies 

with the requirements of paragraph 

(c)(2) of this section. 

(2) The provider must submit its 

request for review in writing, attach a 

copy of the intermediary decision for 

which it seeks review and include a 

brief description of: 

(i) Those aspects of the intermediary 

hearing officer decision with which the 

provider is dissatisfied. 

(ii) The reasons for the provider’s 

dissatisfaction. 

(iii) Any argument or record evidence 

the provider believes supports its 

position. 

(iv) Any additional, extra-record 

evidence relied on by the provider, 

along with a demonstration that the 

evidence was improperly excluded from 

the intermediary hearing (see 

§ 405.1823). 

(3) A provider request for immediate 

review of an intermediary hearing 

officer ruling authorizing discovery or 

disclosure in accordance with paragraph 

(b)(3) of this section must: 

(i) Be made as soon as practicable 

after the ruling is made, but in no event 

later than 5 business days after the date 

it received notice of the ruling. 

(ii) State the reason(s) why the ruling 

is in error and the potential harm that 

may be caused if immediate review is 

not granted. 

(d) Own motion review. (1) The 

Administrator has discretion to initiate 

the CMS reviewing official procedure, 

on his or her own motion, of an 

intermediary hearing officer decision 

(regardless of whether the decision was 

favorable or unfavorable to the provider) 

or other reviewable action. 

(2) In order to execise this authority, 

the designated CMS reviewing official 

must, no later than 60 days after the 

35750 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

date the Office of Hearings received the 

intermediary hearing officer decision, 

notify the parties and the intermediary 

that he or she reviews the intermediary 

hearing officer decision or other 

reviewable action. 

(3) In the notice, the designated CMS 

reviewing officer identifies with 

particularity the issues that are to be 

reviewed, and gives the parties (see 

§ 405.1815) a reasonable period to 

comment on the issues through a 

written submission complying with 

paragraph (c)(2) of this section. 

(e) Review procedure. (1) In reviewing 

an intermediary hearing officer decision 

specified in paragraph (b)(2) of this 

section, the CMS reviewing official 

must: 

(i) Comply with all applicable law, 

regulations, and CMS Rulings (see 

§ 401.108 of this chapter), and afford 

great weight to other interpretive and 

procedural rules and general statements 

of policy; 

(ii) Subject to paragraph (e)(1)(iii) of 

this section, limit the review to the 

record of the proceedings before the 

intermediary hearing officer(s) (see 

§ 405.1827) and any written 

submissions by the parties under 

paragraphs (c)(2) or (d) of this section; 

and

(iii) Consider additional, extra-record 

evidence only if he or she determines 

that the evidence was improperly 

excluded from the intermediary hearing 

(see § 405.1823). 

(2) Review of an intermediary 

decision specified in paragraph (b)(2) of 

this section is limited to a hearing on 

the written record in accordance with 

paragraph (e)(1)(ii) of this section unless 

the CMS reviewing official determines 

that: 

(i) Additional, extra-record evidence 

may be considered in accordance with 

paragraph (e)(1)(iii) of this section; 

(ii) An oral hearing is necessary for 

consideration of the extra-record 

evidence; and 

(iii) The matter must not be remanded 

to the intermediary hearing officer(s) in 

accordance with paragraph (f)(2) of this 

section. 

(3) Upon completion of the review of 

an intermediary decision specified in 

paragraph (b)(2) of this section, the CMS 

reviewing official issues a written 

decision that affirms, reverses, modifies, 

or remands the intermediary hearing 

officer decision. A copy of the decision 

must be mailed promptly to each party, 

to the intermediary, and to CMS’s Office 

of Hearings. 

(f) Effect of a decision; remand. (1) A 

decision of affirmation, reversal, or 

modification by the CMS reviewing 

official is final and binding on each 

party and the intermediary. No further 

review or appeal of a decision is 

available, but the decision may be 

reopened by a CMS reviewing official in 

accordance with §§ 405.1885 through 

405.1889. Decisions of a CMS reviewing 

official are subject to the provisions of 

§ 405.1803(d). A decision by a CMS 

reviewing official remanding an appeal 

to the intermediary hearing officer(s) for 

further proceedings under paragraph 

(f)(2) of this section is not a final 

decision. 

(2) A remand to the intermediary 

hearing officer(s) by the CMS reviewing 

official must—

(i) Vacate the intermediary hearing 

officer decision; 

(ii) Be governed by the same criteria 

that apply to remands by the 

Administrator to the Board under 

§ 405.1875(f)(2), and require the 

intermediary hearing officer(s) to take 

specific actions on remand; and 

(iii) Result in the intermediary 

hearing officer(s) taking the actions 

required on remand and issuing a new 

intermediary hearing decision in 

accordance with § 405.1831 and 

§ 405.1833. 

14. Section 405.1835 is revised to read 

as follows:

§ 405.1835 Right to Board hearing; 

contents of, and adding issues to, hearing 

request. 

(a) Criteria. A provider (but no other 

individual, entity, or party) has a right 

to a Board hearing, as a single provider 

appeal, for specific items claimed for a 

cost reporting period covered by an 

intermediary or Secretary determination 

for the period, only if—

(1) The provider has preserved its 

right to claim dissatisfaction with the 

amount of Medicare payment for the 

specific item(s) at issue, by either: 

(i) Including a claim for specific 

item(s) on its cost report for the period 

where the provider seeks payment that 

it believes to be in accordance with 

Medicare policy; or 

(ii) Self-disallowing the item(s) by 

following the applicable procedures for 

filing a cost report under protest, where 

the provider seeks payment that it 

believes may not be allowable or may 

not be in accordance with Medicare 

policy (for example, if the intermediary 

lacks discretion to award the 

reimbursement the provider seeks for 

the item(s)). 

(2) The amount in controversy (as 

determined in accordance with 

§ 405.1839) is $10,000 or more; and 

(3) Unless the provider qualifies for a 

good cause extension under § 405.1836, 

the date of receipt by the Board of the 

provider’s hearing request is—

(i) No later than 180 days after the 

date of receipt by the provider of the 

intermediary or Secretary 

determination; or 

(ii) If the intermediary determination 

is not issued (through no fault of the 

provider) within 12 months of the date 

of receipt by the intermediary of the 

provider’s perfected cost report or 

amended cost report (as specified in 

§ 413.24(f) of this chapter), no later than 

180 days after the expiration of the 12 

month period for issuance of the 

intermediary determination. The date of 

receipt by the intermediary of the 

provider’s perfected cost report or 

amended cost report is presumed to be 

the date the intermediary stamped 

‘‘Received’’ unless it is shown by a 

preponderance of the evidence that the 

intermediary received the cost report on 

an earlier date. 

(b) Contents of request for a Board 

hearing. The provider’s request for a 

Board hearing must be submitted in 

writing to the Board, and the request 

must include:

(1) A demonstration that the provider 

satisfies the requirements for a Board 

hearing as specified in paragraph (a) of 

this section, including a specific 

identification of the intermediary or 

Secretary determination under appeal. 

(2) An explanation (for each specific 

item at issue, see § 405.1835(a)(1)) of the 

provider’s dissatisfaction with the 

intermediary or Secretary determination 

under appeal, including an account of: 

(i) Why the provider believes 

Medicare payment is incorrect for each 

disputed item. 

(ii) How and why the provider 

believes Medicare payment must be 

determined differently for each disputed 

item. 

(iii) If the provider self-disallows a 

specific item, a description of the nature 

and amount of each self-disallowed item 

and the reimbursement or payment 

sought for the item. 

(3) A copy of the intermediary or 

Secretary determination under appeal, 

and any other documentary evidence 

the provider considers necessary to 

satisfy the hearing request requirements 

of paragraphs (b)(1) and (2) of this 

section. 

(c) Adding issues to the hearing 

request. After filing a hearing request in 

accordance with paragraphs (a) and (b) 

of this section, a provider may add 

specific Medicare payment issues to the 

original hearing request by submitting a 

written request to the Board, only if: 

(1) A request to add issues complies 

with the requirements of paragraphs 

(a)(1) and (b) of this section as to each 

new issue. 

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(2) The specific matters at issue raised 

in the initial hearing request and the 

matters identified in subsequent 

requests to add issues, when combined, 

satisfy the requirements of paragraph 

(a)(2) of this section. 

(3) The Board receives the request to 

add issues no later than 60 days after 

the expiration of the applicable 180–day 

period prescribed in paragraph (a)(3) of 

this section or, for a request to add 

issue(s) following a reopening 

conducted in accordance with and 

within the period specified in 

§ 405.1885(c)(1). 

15. Section 405.1836 is added to read 

as follows:

§ 405.1836 Good cause extension of time 

limit for requesting a Board hearing. 

(a) A request for a Board hearing that 

the Board receives after the applicable 

180-day time limit prescribed in 

§ 405.1835(a)(3) must be dismissed by 

the Board, except the Board may extend 

the time limit upon a good cause 

showing by the provider. 

(b) The Board may find good cause to 

extend the time limit only if the 

provider demonstrates in writing it can 

not reasonably be expected to file timely 

due to extraordinary circumstances 

beyond its control such as natural or 

other catastrophe, fire, or strike, and the 

provider’s written request for an 

extension is received by the Board 

within a reasonable time (as determined 

by the Board under the circumstances) 

after the expiration of the applicable 

180-day limit specified in 

§ 405.1835(a)(3). 

(c) The Board may not grant a request 

for an extension under this section if—

(1) The provider relies on a change in 

the law, regulations, CMS Rulings, or 

general CMS instructions (whether 

based on a court decision or otherwise) 

or a CMS administrative ruling or policy 

as the basis for the extension request; or 

(2) The date of receipt by the Board 

of the provider’s extension request is 

later than 3 years after the date of the 

intermediary or other determination that 

the provider seeks to appeal.

(d) If an extension request is granted 

or denied under this section, the Board 

must give prompt written notice to the 

provider, and mail a copy of the notice 

to each party to the appeal. The notice 

must include a detailed explanation of 

the reasons for the decision by the 

Board and the facts underlying the 

decision. 

(e)(1) If the Board denies an extension 

request and determines it lacks 

jurisdiction to grant a hearing for every 

specific matter at issue in an appeal, it 

must issue a Board Dismissal Decision 

dismissing the appeal for lack of Board 

jurisdiction. This decision by the Board 

must be in writing and include the 

explanation of the extension request 

denial required under paragraph (d) of 

this section, in addition to specific 

findings of fact and conclusions of law 

explaining the Board’s determination 

that it lacks jurisdiction to grant a 

hearing on each matter at issue in the 

appeal (see § 405.1840(c)). A copy of the 

Board’s Dismissal Decision must be 

mailed promptly to each party to the 

appeal (see § 405.1843). 

(2) A Board Dismissal Decision under 

paragraph (e)(1) of this section is final 

and binding on the parties unless the 

decision is reversed, affirmed, modified, 

or remanded by the Administrator 

under § 405.1875(a)(2)(ii), paragraph (e), 

and paragraph (f) no later than 60 days 

after the date of receipt by the provider 

of the Board’s decision. This Board 

decision is inoperative during the 60-

day period for review of the decision by 

the Administrator, or in the event the 

Administrator reverses, affirms, 

modifies, or remands that decision, 

within the period. A Board decision 

under paragraph (e)(1) of this section 

that is otherwise final and binding may 

be reopened by the Board in accordance 

with § 405.1885 through § 405.1889. 

(3) The Administrator may review a 

Board decision granting an extension 

request solely during the course of an 

Administrator review of one of the 

Board decisions specified as final, or 

deemed final by the Administrator, 

under § 405.1875(a)(2). 

(4) A finding by the Board or the 

Administrator that the provider did or 

did not demonstrate good cause for 

extending the time for requesting a 

Board hearing is not subject to judicial 

review. 

16. Section 405.1837 is revised to read 

as follows:

§ 405.1837 Group appeals. 

(a) Right to Board hearing as part of 

a group appeal; criteria. A provider (but 

no other individual, entity, or party) has 

a right to a Board hearing, as part of a 

group appeal with other providers, for 

specific items claimed for a cost 

reporting period covered by an 

intermediary or Secretary determination 

for the period, only if—

(1) The provider satisfies individually 

the requirements for a Board hearing 

under § 405.1835(a), except for the 

$10,000 amount in controversy 

requirement under § 405.1835(a)(2); 

(2) The matter at issue in the group 

appeal involves a single question of fact 

or interpretation of law, regulations, or 

CMS Rulings that is common to each 

provider in the group; and 

(3) The amount in controversy is, in 

the aggregate, $50,000 or more, as 

determined in accordance with 

§ 405.1839. 

(b) Usage and filing of group appeals.

(1) Mandatory use of group appeals.

Two or more providers under common 

ownership or control must bring a group 

appeal before the Board in accordance 

with this section, if the providers wish 

to appeal to the Board a specific matter 

at issue that involves a question of fact 

or interpretation of law, regulations, or 

CMS Rulings that is common to the 

providers, and for which the amount in 

controversy is $50,000 or more in the 

aggregate. Any commonly owned or 

controlled provider may not appeal to 

the Board any common issue in a single 

provider appeal brought under 

§ 405.1835. 

(2) Optional use of group appeals.

Two or more providers not under 

common ownership or control may 

bring a group appeal before the Board 

under this section, if the providers wish 

to appeal to the Board a specific matter 

at issue that involves a question of fact 

or interpretation of law, regulations, or 

CMS Rulings that is common to the 

providers. Alternatively, any provider 

may appeal to the Board any issues in 

a single provider appeal brought under 

§ 405.1835. 

(3) Initiating a group appeal. A 

provider that is required to bring a 

group appeal under paragraph (b)(1) of 

this section must submit, either alone or 

with other commonly owned or 

operated providers, a written request for 

a Board hearing as a group appeal in 

accordance with paragraph (c) of this 

section. Any group appeal filed by a 

single provider must be joined by 

related providers on common issues in 

accordance with paragraphs (b)(1) and 

(e) of this section. Providers that have 

the option of bringing a group appeal 

under paragraph (b)(2) of this section 

may submit—

(i) Initially a written request for a 

Board hearing as a group appeal in 

accordance with paragraph (c) of this 

section; or

(ii) A request to the Board in 

accordance with paragraph (e)(4) of this 

section that a specific matter at issue in 

a single provider appeal, filed 

previously under § 405.1835, be 

transferred from the single appeal to a 

group appeal. 

(c) Contents of request for a group 

appeal. The request by a provider (or 

providers) for a Board hearing as a 

group appeal must be submitted in 

writing to the Board, and the request 

must include—

(1) A demonstration that the request 

satisfies—

35752 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

(i) All of the requirements for a Board 

hearing as a group appeal, as specified 

in paragraph (a) of this section; or 

(ii) At least the requirements for a 

Board hearing as a group appeal under 

paragraph (a)(1) of this section, if the 

request is submitted in accordance with 

paragraph (c)(4)(ii) of this section; 

(2) An explanation (for each specific 

cost at issue, see § 405.1835(a)(1)) of 

each provider’s dissatisfaction with its 

intermediary or Secretary determination 

under appeal, including an account of—

(i) Why the provider believes 

Medicare payment is incorrect for each 

disputed cost; 

(ii) How and why the provider 

believes Medicare payment must be 

determined differently for each disputed 

cost; and 

(iii) If the provider self-disallows a 

specific cost, a description of the nature 

and amount of each self-disallowed cost 

and the reimbursement sought for each 

cost. 

(3) A copy of each intermediary or 

Secretary determination under appeal, 

and any other documentary evidence 

the providers consider necessary to 

satisfy the hearing request requirements 

of paragraphs (c)(1) and (c)(2) of this 

section, and a precise description of the 

one question of fact or interpretation of 

law, regulations, or CMS Rulings that is 

common to the particular matters at 

issue in the group appeal; and 

(4) A statement representing that 

either—

(i) The providers believe they have 

satisfied all of the requirements for a 

group appeal hearing request under 

paragraph (a) of this section and the 

Board can proceed to make 

jurisdictional findings in accordance 

with § 405.1840; or 

(ii) The Board must defer making 

jurisdictional findings until the 

providers request the findings in 

accordance with paragraph (e)(2) of this 

section. 

(d) Board’s preliminary response to 

group appeal hearing requests. (1) Upon 

receipt of a group appeal hearing 

request, the Board must take any 

necessary ministerial steps. 

(2) The steps, include, for example—

(i) Acknowledging the request; 

(ii) Assigning a case number to the 

appeal; or 

(iii) If applicable, transferring a 

specific matter at issue from a single 

provider appeal filed under § 405.1835 

to a group appeal filed under this 

section. 

(3) For group appeal hearing requests 

submitted in accordance with paragraph 

(c)(4)(i) of this section, the Board must 

make jurisdictional findings in 

accordance with § 405.1840 before 

conducting any further proceedings in 

the appeal under paragraph (e)(3) of this 

section. 

(4) For hearing requests submitted in 

accordance with paragraph (c)(4)(ii) of 

this section, the Board may not make 

jurisdictional findings under § 405.1840 

until the providers request the findings 

under paragraph (e)(2) of this section. 

(e) Group appeal procedures pending 

full formation of the group and issuance 

of a Board decision. (1) A provider (or 

providers) may file a group appeal 

hearing request with the Board under 

this section before each provider 

member of the group identifies or 

complies with paragraphs (a)(1) and 

(a)(2) of this section, or before the group 

satisfies the $50,000 amount in 

controversy requirement under 

paragraph (a)(3) of this section. 

Proceedings before the Board in any 

partially formed group appeal are 

subject to the provisions of paragraphs 

(e)(2), (e)(3), and (e)(4) of this section. 

(2) For group appeal hearing requests 

submitted in accordance with paragraph 

(c)(4)(ii) of this section, the Board may 

not make jurisdictional findings under 

§ 405.1840 until the providers request 

the findings by notifying the Board in 

writing that the group appeal is fully 

formed, or that the providers believe 

they have satisfied all of the 

requirements for a group appeal hearing 

request and the Board can proceed to 

make jurisdictional findings. The 

providers must include with the notice 

any additional information or 

documentary evidence that is required 

for group appeal hearing requests under 

paragraph (c) of this section, but was not 

previously submitted by the group 

members (see § 405.1837(c)(1)(ii)). After 

receiving the notice from the providers, 

the Board must make jurisdictional 

findings in accordance with § 405.1840.

(3) If the Board finds jurisdiction to 

conduct a hearing as a group appeal 

under this section, the Board then takes 

any further actions in the appeal it finds 

to be appropriate under this subpart (see 

§ 405.1840(a)). The Board may take 

further actions even though the 

providers in the appeal may wish to add 

other providers to the group in 

accordance with paragraph (e)(4) of this 

section, but the Board must make 

separate jurisdictional findings for each 

cost reporting period added 

subsequently to the group appeal (see 

§ 405.1837(a) and § 405.1839(b)). 

(4) A provider may submit a request 

to the Board to join a group appeal 

anytime before the Board issues one of 

the decisions specified in 

§ 405.1875(a)(2). By submitting a 

request, the provider agrees that, if the 

request is granted, the provider is bound 

by the Board’s actions and decision in 

the appeal. 

(5) The Board must grant any request 

that is unopposed by the group 

members, received by the Board before 

the date of issuance of one of the 

decisions specified in § 405.1875(a)(2), 

and otherwise complies with this 

section. 

(6) If the Board denies a request, the 

Board’s action is without prejudice to 

any separate appeal the provider may 

bring in accordance with § 405.1811, 

§ 405.1835, or this section. 

(7) For purposes of determining 

timeliness for any separate appeal, the 

period from the date of receipt of the 

provider’s original hearing request 

through the date of receipt by the 

provider of the Board’s denial of the 

provider’s request to join the group 

appeal must be excluded from the 

applicable 180-day period for filing a 

separate appeal (see § 405.1835(a)(3)) 

and from the 60-day period for adding 

issues to any single provider appeal (see 

§ 405.1835(c)(3)). 

(f) Limitations on group appeals. (1) 

After the date of receipt by the Board of 

a group appeal hearing request under 

paragraph (c) of this section, a provider 

may not add other questions of fact or 

law to the appeal, regardless of whether 

the question is common to other 

members of the appeal (see 

§ 405.1837(a)(2) and § 405.1837(g)). 

(2) The Board may not consider, in 

one group appeal, more than one 

question of fact or of interpretation of 

law, regulations, or CMS Rulings that is 

common to each provider in the appeal. 

If the Board finds jurisdiction over a 

group appeal hearing request under 

§ 405.1840: 

(i) The Board must determine whether 

the appeal involves specific matters at 

issue that raise more than one factual or 

legal question common to each 

provider. 

(ii) Where the appeal is found to 

involve more than one factual or legal 

question common to each provider, 

assign a separate case number to the 

appeal of each common factual or legal 

question and conduct further 

proceedings in the various appeals 

separately for each case. 

(g) Issues not common to the group 

appeal. A provider involved in a group 

appeal that also wishes to appeal a 

specific matter that does not raise a 

factual or legal question common to 

each of the other providers in the group 

must file a separate request for a single 

provider hearing in accordance with 

§ 405.1811 or § 405.1835 or file a 

separate request for a hearing as part of 

a different group appeal under this 

section, as applicable. 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35753

17. Section 405.1839 is revised to read 

as follows:

§ 405.1839 Amount in controversy. 

(a) Single provider appeals. (1) In 

order to satisfy the amount in 

controversy requirement under 

§ 405.1811(a)(2) for an intermediary 

hearing or the amount in controversy 

requirement under § 405.1835(a)(2) for a 

Board hearing for a single provider, the 

provider must demonstrate that if its 

appeal were successful, the provider’s 

total program reimbursement for each 

cost reporting period under appeal 

increases by at least $1,000 but by less 

than $10,000 for an intermediary 

hearing, or by at least $10,000 for a 

Board hearing, as applicable. 

(2) Aggregation of claims. For 

purposes of satisfying the applicable 

amount in controversy requirement for 

a single provider appeal to the 

intermediary or the Board, the provider 

may aggregate claims for additional 

program payment for more than one 

specific matter at issue, provided each 

specific claim and issue is for the same 

cost reporting period. Aggregation of 

claims from more than one cost 

reporting period to meet the applicable 

amount in controversy requirement is 

prohibited, even if a specific claim or 

issue recurs in the appeal for multiple 

cost years. 

(b) Group appeals. (1) In order to 

satisfy the amount in controversy 

requirement under § 405.1837(a)(3) for a 

Board hearing as a group appeal, the 

group must demonstrate that if its 

appeal were successful, the total 

program reimbursement for the cost 

reporting periods under appeal 

increases, in the aggregate, by at least 

$50,000.

(2) Aggregation of claims. For 

purposes of satisfying the amount in 

controversy requirement, group 

members are not allowed to aggregate 

claims involving different issues. A 

group appeal must involve a single 

question of fact or interpretation of law, 

regulations, or CMS Ruling that is 

common to each provider (see 

§ 405.1837(a)(2)). However, the single 

issue that is common to each provider 

may exist over different cost reporting 

periods. For purposes of satisfying the 

amount in controversy requirement, a 

provider may appeal multiple cost 

reporting periods and different 

providers in the group may appeal 

different cost reporting periods. 

(c) Limitations on change in Medicare 

reimbursement. 

(1) In order to satisfy the applicable 

amount in controversy requirement for 

a single provider appeal or a group 

appeal, an appeal favorable to the 

provider(s) on all specific matters at 

issue in the appeal increases program 

reimbursement for the provider(s) in the 

cost reporting period(s) at issue by an 

amount that equals or exceeds the 

applicable amount in controversy 

threshold. 

(2) The applicable amount in 

controversy requirement is not satisfied 

if the result of a favorable appeal 

decreases program reimbursement for 

the provider(s) in the cost reporting 

year(s) at issue in the appeal. 

(3) Any effects that a favorable appeal 

might have on program reimbursement 

for the provider(s) in cost reporting 

period(s) not at issue in the appeal have 

no bearing on whether the amount in 

controversy requirement is satisfied for 

the cost year(s) at issue in the appeal. 

18. A new § 405.1840 is added to read 

as follows:

§ 405.1840 Board jurisdiction. 

(a) General rules. (1) After a request 

for a Board hearing is filed under 

§ 405.1835 or § 405.1837 of this part, the 

Board must determine in accordance 

with paragraph (b) of this section, 

whether or not it has jurisdiction to 

grant a hearing on each of the specific 

matters at issue in the hearing request. 

(2) The Board must make a 

preliminary determination of the scope 

of its jurisdiction, if any, over the 

matters at issue in the appeal, and notify 

the parties of its specific jurisdictional 

findings, before conducting any of the 

following proceedings: 

(i) Determining its authority to decide 

a legal question relevant to a matter at 

issue (see § 405.1842 of this part); 

permitting discovery (see § 405.1853). 

(ii) Issuing a subpoena (see 

§ 405.1857).

(iii) Conducting a hearing (see 

§ 405.1845 of this part). 

(3) The Board may revise a 

preliminary jurisdictional finding at any 

subsequent stage of the proceedings in 

a Board appeal, and must promptly 

notify the parties of any revised 

findings. Under paragraph (c)(1) of this 

section, each expedited judicial review 

decision (see § 405.1842 of this part) 

and hearing decision (see § 405.1871 of 

this part) by the Board must include a 

jurisdictional finding for each specific 

matter at issue in the appeal. 

(4) If the Board determines it lacks 

jurisdiction over every specific matter at 

issue in the appeal, the Board must 

issue a Dismissal Decision under 

paragraph (c)(2) of this section. 

(5) Jurisdictional findings and 

Dismissal Decisions by the Board under 

paragraphs (c)(1) and (c)(2) of this 

section are subject to Administrator and 

judicial review in accordance with 

paragraph (d) of this section. 

(b) Criteria. The Board’s jurisdiction 

to grant a hearing must be determined 

separately for each specific matter at 

issue in each intermediary or Secretary 

determination for each cost reporting 

period under appeal. The Board has 

jurisdiction to grant a hearing over a 

specific matter at issue in an appeal 

only if the provider has a right to a 

Board hearing as a single provider 

appeal under § 405.1835 of this part or 

as part of a group appeal under 

§ 405.1837 of this part, as applicable. 

Certain matters at issue are removed 

from the Board’s jurisdiction; these 

matters include, but are not necessarily 

limited to, the following: 

(1) A finding in an intermediary 

determination that expenses incurred 

for certain items or services furnished 

by a provider to an individual are not 

payable under title XVIII of the Act 

because those items or services are 

excluded from coverage under section 

1862 of the Act, and § 411.15 of this 

chapter; review of these findings is 

limited to the applicable provisions of 

sections 1155, 1869, and 1879(d) of the 

Act, and of subparts G and H of part 405 

and subpart B of part 473, as applicable. 

(2) Certain matters affecting payments 

to hospitals under the prospective 

payment system, as provided in 

§ 405.1804 of this part. 

(3) Any self-disallowed cost, except as 

permitted in § 405.1835(a)(1)(ii) and 

§ 405.1837(a)(1) of this part. 

(c) Board’s Jurisdictional Findings 

and Jurisdictional Dismissal Decisions. 

(1) In issuing an Expedited Judicial 

Review Decision under § 405.1842 of 

this part or a Hearing Decision under 

§ 405.1871 of this part, as applicable, 

the Board must make a separate 

determination of whether it has 

jurisdiction for each specific matter at 

issue in each intermediary or Secretary 

determination under appeal. A decision 

by the Board must include specific 

findings of fact and conclusions of law 

as to whether the Board has jurisdiction 

to grant a hearing on each matter at 

issue in the appeal. 

(2) Except as provided in 

§ 405.1836(e)(1) and § 405.1842(g)(2)(i) 

of this part, where the Board determines 

it lacks jurisdiction to grant a hearing 

for every specific matter at issue in an 

appeal, it must issue a Dismissal 

Decision dismissing the appeal for lack 

of Board jurisdiction. The decision by 

the Board must include specific findings 

of fact and conclusions of law 

explaining the Board’s determination 

that it lacks jurisdiction to grant a 

hearing on each matter at issue in the 

appeal. A copy of the Board’s decision 

35754 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

must be mailed promptly to each party 

to the appeal (see § 405.1843 of this 

part). 

(3) A Dismissal Decision by the Board 

under paragraph (c)(2) of this section is 

final and binding on the parties unless 

the decision is reversed, affirmed, 

modified, or remanded by the 

Administrator under § 405.1875(a)(2)(ii), 

(e), and (f) no later than 60 days after the 

date of receipt by the provider of the 

Board’s decision. The Board decision is 

inoperative during the 60-day period for 

review of the decision by the 

Administrator, or in the event the 

Administrator reverses, affirms, 

modifies, or remands that decision 

within that period. A final Board 

decision under paragraphs (c)(2) and 

(c)(3) of this section, may be reopened 

by the Board in accordance with 

§§ 405.1885 through 405.1889 of this 

part. 

(d) Administrator and judicial review. 

Any finding by the Board as to whether 

it has jurisdiction to grant a hearing on 

a specific matter at issue in an appeal 

is not subject to further administrative 

and judicial review, except as provided 

in this paragraph. The Board’s 

jurisdictional findings as to specific 

matters at issue in an appeal may be 

reviewed solely during the course of 

Administrator review of one of the 

Board decisions specified as final, or 

deemed to be final by the Administrator, 

under § 405.1875(a)(2) of this part, or 

during the course of judicial review of 

a final agency decision as described in 

§ 405.1877(a) of this part, as applicable.

§ 405.1841 [Removed] 

19. Section 405.1841 is removed. 

20. Section 405.1842 is revised to read 

as follows:

§ 405.1842 Expedited judicial review. 

(a) Basis and scope. (1) This section 

implements provisions in section 

1878(f)(1) of the Act that give a provider 

the right to seek expedited judicial 

review (EJR) of a legal question relevant 

to a specific matter at issue in a Board 

appeal if there is Board jurisdiction to 

conduct a hearing on the matter (see 

§ 405.1840 of this part), and the Board 

determines it lacks the authority to 

decide the legal question (see § 405.1867 

of this part, which describes the scope 

of Board’s legal authority). 

(2) A provider may request a Board 

decision that the provider is entitled to 

seek EJR or the Board may consider 

issuing a decision on its own motion. 

Each EJR Decision by the Board must 

include a specific jurisdictional finding 

on the matter(s) at issue, and, where the 

Board determines that it does have 

jurisdiction on the matter(s) at issue, a 

separate determination of the Board’s 

authority to decide the legal question(s). 

(3) The Administrator may review the 

Board’s jurisdictional finding, but not 

the Board’s authority determination. 

(4) The provider has a right to seek 

EJR of the legal question under section 

1878(f)(1) of the Act only: 

(i) If the final EJR Decision of the 

Board or the Administrator, as 

applicable, includes a finding of Board 

jurisdiction over the specific matter at 

issue and a determination by the Board 

that it has no authority to decide the 

relevant legal question; or 

(ii) If the Board fails to make a 

determination of its authority to decide 

the legal question no later than 30 days 

after finding jurisdiction over the matter 

at issue and notifying the provider that 

the provider’s EJR request is complete. 

(b) Overview—(1) Prerequisite of 

Board jurisdiction. The Board or the 

Administrator must find that the Board 

has jurisdiction over the specific matter 

at issue before the Board may determine 

its authority to decide the legal 

question. 

(2) Initiating EJR procedures. A 

provider or group of providers may 

request the Board to grant EJR of a 

specific matter or matters under appeal, 

or the Board on its own motion may 

consider whether to grant EJR of a 

specific matter or matters under appeal. 

Under paragraph (c) of this section, the 

Board may initiate own motion 

consideration of its authority to decide 

a legal question only if the Board makes 

a preliminary finding that it has 

jurisdiction over the specific matter at 

issue to which the legal question is 

relevant. Under paragraphs (d) and (e) of 

this section, a provider may request a 

determination of the Board’s authority 

to decide a legal question, but the 30-

day period for the Board to make a 

determination under section 1878(f)(1) 

of the Act does not begin to run until 

the Board finds jurisdiction to conduct 

a hearing on the specific matter at issue 

in the EJR request and notifies the 

provider that the provider’s request is 

complete. 

(c) Board’s own motion consideration. 

(1) If the Board makes a finding that it 

has jurisdiction to conduct a hearing on 

a specific matter at issue in accordance 

with § 405.1840(a) of this part, it may 

then consider on its own motion, 

whether it lacks the authority to decide 

a legal question relevant to the matter at 

issue. 

(2) The Board must initiate its own 

motion consideration by issuing a 

written notice to each of the parties to 

the appeal (see § 405.1843 of this part). 

The notice must:

(i) Identify each specific matter at 

issue for which the Board has made a 

finding that it has jurisdiction under 

§ 405.1840(a) of this part, and for each 

specific matter, identify each relevant 

statutory provision, regulation, or CMS 

Ruling. 

(ii) Specify a reasonable period of 

time for the parties to respond in 

writing. 

(3) After considering any written 

responses made by the parties to its 

notice of own motion consideration, the 

Board must determine whether it has 

sufficient information to issue an EJR 

Decision for each specific matter and 

legal question included in the notice. If 

necessary, the Board may request 

additional information regarding its 

jurisdiction or authority from a party (or 

parties), and the Board must give any 

other party a reasonable opportunity to 

comment on any additional submission. 

Once the Board determines it needs no 

further information from the parties (or 

that any information has not been 

rendered timely), it must issue an EJR 

Decision in accordance with paragraph 

(f) of this section. 

(d) Provider requests. A provider (or, 

in the case of a group appeal, the group 

of providers) may request a 

determination by the Board that it lacks 

the authority to decide a legal question 

relevant to a specific matter at issue in 

an appeal. A provider must submit a 

request in writing to the Board and to 

each party to the appeal (see § 405.1843 

of this part), and the request must 

include—

(1) For each specific matter and 

question included in the request, an 

explanation of why the provider 

believes the Board has jurisdiction 

under § 405.1840 of this part over each 

matter at issue and no authority to 

decide each relevant legal question; and 

(2) Any documentary evidence the 

provider believes supports the request. 

(e) Board action on provider requests. 

(1) If the Board makes a finding that it 

has jurisdiction to conduct a hearing on 

a specific matter at issue in accordance 

with § 405.1840(a) of this part, then (and 

only then) it must consider whether it 

lacks the authority to decide a legal 

question relevant to the matter at issue. 

The Board is required to make a 

determination of its authority to decide 

the legal question raised in a review 

request under paragraph (d)(1) of this 

section, by issuing an EJR Decision no 

later than 30 days after receiving a 

complete provider request as defined in 

paragraph (e)(2) of this section. 

(2) Requirements of a complete 

provider request. A complete provider 

request for EJR consists of: 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35755

(i) A request for an EJR Decision by 

the provider(s). 

(ii) All of the information and 

documents found necessary by the 

Board for issuing a decision in 

accordance with paragraph (f) of this 

section. 

(3) Board’s response to provider 

requests. After receiving a provider 

request for an EJR Decision, the Board 

must review the request, along with any 

responses to the request submitted by 

other parties to the appeal (see 

§ 405.1843 of this part). The Board must 

respond to the provider(s) as follows: 

(i) Upon receiving a complete 

provider request, issue an EJR Decision 

in accordance with paragraph (f) of this 

section no later than 30 days after 

receipt of the complete provider request. 

If the Board does not issue a decision 

within that 30-day period, the provider 

has a right to file a complaint in Federal 

district court in order to obtain EJR over 

the specific matter(s) at issue. 

(ii) If the provider has not submitted 

a complete request, issue a written 

notice to the provider describing in 

detail the further information that the 

provider must submit in order to 

complete the request. 

(f) Board’s decision on EJR: criteria for 

granting EJR. Subject to paragraph (h)(3) 

of this section, the Board is required to 

issue an EJR decision following either 

the completion of the Board’s own 

motion consideration under paragraph 

(c) or a notice issued by the Board in 

accordance with paragraph (e)(3)(i) of 

this section. 

(1) The Board’s decision must grant 

EJR for a legal question relevant to a 

specific matter at issue in a Board 

appeal if the Board determines the 

following conditions are satisfied: 

(i) The Board determines that it has 

jurisdiction to conduct a hearing on the 

specific matter at issue in accordance 

with § 405.1840 of this part. 

(ii) The Board determines it lacks the 

authority to decide a specific legal 

question relevant to the specific matter 

at issue because the legal question is a 

challenge to the constitutionality of a 

provision of a statute, or the substantive 

and procedural validity of a regulation 

or CMS Ruling. 

(2) Must deny EJR for a legal question 

relevant to a specific matter at issue in 

a Board appeal if any of the following 

conditions are satisfied: 

(i) The Board determines that it does 

not have jurisdiction to conduct a 

hearing on the specific matter at issue 

in accordance with § 405.1840; or

(ii) The Board determines it has the 

authority to decide a specific legal 

question relevant to the specific matter 

at issue because the legal question is not 

a challenge to the constitutionality of a 

provision of a statute, and is not a 

challenge to the substantive and/or 

procedural validity of a regulation or 

CMS Ruling. 

(iii) The Board does not have 

sufficient information to determine 

whether the criteria specified in 

paragraph (f)(i) or (f)(ii) of this section 

are met. 

(3) A copy of the Board’s decision 

must be sent promptly to each party to 

the Board appeal (see § 405.1843 of this 

part) and to the Office of the Attorney 

Advisor. 

(g) Further review after the Board 

issues an EJR Decision— (1) General 

rules. (i) Under § 405.1875(a)(2)(iii) of 

this part, the Administrator may review, 

on his or her own motion, or at the 

request of a party, the jurisdictional 

component only of the Board’s EJR 

Decision. 

(ii) Any review by the Administrator 

is limited to the question of whether 

there is Board jurisdiction over the 

specific matter at issue; the 

Administrator may not review the 

Board’s determination of its authority to 

decide the legal question. 

(iii) An EJR Decision by the Board 

becomes final and binding on the 

parties unless the decision is reversed, 

affirmed, modified, or remanded by the 

Administrator under 

§ 405.1875(a)(2)(iii) of this part, (e), and 

(f) of this section no later than 60 days 

after the date of receipt by the provider 

of the Board’s decision. 

(iv) A Board decision is inoperative 

during the 60-day period for review by 

the Administrator, or in the event the 

Administrator reverses, affirms, 

modifies, or remands that decision 

within that period. 

(v) Any right of the provider to obtain 

EJR from a Federal district court is 

specified at paragraphs (g)(2) and (g)(3) 

of this section (where the Board issues 

a timely EJR Decision) and paragraph 

(g)(4) of this section (in the absence of 

a timely Board decision). 

(vi) A final Board decision under 

paragraph (f) of this section, and a final 

Administrator decision made upon 

review of final Board decision (see 

§ 405.1875(a)(2) and (e) of this part) may 

be reopened in accordance with 

§§ 405.1885 through 405.1889 of this 

part. 

(2) Board grants EJR. If the Board 

grants EJR, the provider may file a 

complaint in a Federal district court in 

order to obtain expedited judicial 

review of the legal question unless the 

Administrator issues, no later than 60 

days after the date of receipt by the 

provider of the Board’s decision 

granting EJR, a decision finding that the 

Board has no jurisdiction over the 

matter at issue, thereby reversing the 

Board’s decision (see § 405.1877(a)(3) 

and (b)(3) of this part). 

(3) Board denies EJR. If the Board’s 

decision denies EJR because the Board 

finds that it has the authority to decide 

the legal question relevant to the matter 

at issue, the Administrator may not 

review the Board’s authority 

determination and the provider has no 

right to obtain expedited judicial 

review. If the Board denies EJR based on 

a finding that it lacks jurisdiction over 

the specific matter, the provider has no 

right to obtain EJR unless the 

Administrator issues timely a final 

decision reversing the Board and 

finding the Board has jurisdiction over 

the matter at issue and the Board 

subsequently issues on remand from the 

Administrator an EJR decision granting 

EJR on the basis that it lacks the 

authority to decide the legal question.

(4) No timely EJR Decision. The Board 

must issue an EJR Decision no later than 

30 days after the date of a written notice 

under paragraph (e)(3)(i) of this section, 

when the provider submits a complete 

request for EJR. If the Board does not 

issue an EJR Decision within a 30-day 

period, the provider(s) has a right to 

seek expedited judicial review under 

section 1878(f)(1) of the Act. 

(h) Effect of final EJR Decisions and 

lawsuits on further Board proceedings—

(1) Final decisions granting EJR. If the 

final decision of the Board or the 

Administrator, as applicable (see 

§ 405.1842(g)(1) and § 405.1875(e)(4) of 

this part), grants EJR, the Board may not 

conduct any further proceedings on the 

legal question. The Board must dismiss: 

(i) The specific matter at issue from 

the appeal. 

(ii) The entire appeal if there are no 

other matters at issue that are within the 

Board’s jurisdiction and can be fully 

decided by the Board. 

(2) Final decisions denying EJR. If the 

final decision: 

(i) Of the Board denies EJR solely on 

the basis that the Board determines it 

has the authority to decide the legal 

question relevant to the specific matter 

at issue, the Board must conduct further 

proceedings on the legal question and 

issue a decision on the matter at issue 

in accordance with this subpart. 

Exception: If the provider(s) files a 

lawsuit pertaining to the legal question, 

and for a period that is covered by the 

Board’s decision denying EJR, the Board 

may not conduct any further 

proceedings under this subpart on the 

legal question or the matter at issue 

before the lawsuit is finally resolved. 

(ii) Of the Board or the Administrator 

denies EJR on the basis that the Board 

35756 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

lacks jurisdiction over the specific 

matter at issue, the Board or the 

Administrator, must, as applicable, 

dismiss the specific matter at issue from 

the appeal, or dismiss the appeal 

entirely if there are no other matters at 

issue that are within the Board’s 

jurisdiction and can be fully decided by 

the Board. If only the specific matter(s) 

is dismissed from the appeal, judicial 

review may be had only after a final 

decision on the appeal is made by the 

Board or Administrator, as applicable 

(see § 405.1840(d), § 405.1877(a) of this 

part). If the Board or the Administrator, 

as applicable, dismisses the appeal 

entirely, the decision is subject to 

judicial review under § 405.1877(a) of 

this part. 

(3) Provider lawsuits. (i) If the 

provider files a lawsuit seeking judicial 

review (whether on the basis of the EJR 

provisions of section 1878(f)(1) of the 

Act or otherwise) pertaining to a legal 

question that is allegedly relevant to a 

specific matter at issue for a cost year in 

a Board appeal and not within the 

Board’s authority to decide, the Office of 

the Attorney Advisor must promptly 

provide the Board with written notice of 

the lawsuit and a copy of the complaint. 

(ii) If the lawsuit is filed after a final 

EJR Decision by the Board or the 

Administrator, as applicable (see 

§ 405.1842(g)(1) and § 405.1875(e)(4)), 

on the legal question, the Board must 

carry out the applicable provisions of 

paragraphs (h)(1) and (h)(2) of this 

section in any pending Board appeal on 

the specific matter at issue. 

(iii) If the lawsuit is filed before a 

final EJR Decision is issued on the legal 

question, the Board may not conduct 

any further proceedings on the legal 

question or the matter at issue until the 

lawsuit is resolved. 

21. Section § 405.1843 is revised to 

read as follows:

§ 405.1843 Parties to proceedings in a 

Board appeal. 

(a) When a provider files a request for 

a hearing before the Board in 

accordance with § 405.1835 or 

§ 405.1837, the parties to all 

proceedings in the Board appeal include 

the provider, an intermediary, and, 

where applicable, any other entity 

found by the intermediary to be a 

related organization of the provider 

under § 413.17 of this chapter. 

(b) Neither the Secretary nor CMS 

may be made a party to proceedings in 

a Board appeal. The Board may call as 

a witness any employee or officer of 

Heath and Human Services or CMS 

having personal knowledge of the facts 

and the issues in controversy in an 

appeal. 

(c) An intermediary may designate a 

representative from the Secretary or 

CMS, who may be an attorney, to 

represent the intermediary in 

proceedings before the Board. 

(d) Although CMS is not a party to 

proceedings in a Board appeal, there 

may be instances where CMS 

determines that the administrative 

policy implications of a case are 

substantial enough to warrant comment 

from CMS (see § 405.1863). In these 

cases, CMS may file amicus curiae

(friend of the court) briefing papers with 

the Board in accordance with a schedule 

to be determined by the Board. CMS 

must promptly mail copies of any 

documents filed with the Board to each 

party to the appeal. 

22. Section 405.1845 is amended by—

A. Revising the section heading. 

B. Revising paragraph (c). 

C. Revising paragraph (d).

D. Revising paragraph (e). 

E. Adding paragraph (f). 

F. Adding Paragraph (g). 

The revisions and additions read as 

follows:

§ 405.1845 Composition of Board; 

hearings, decisions, and remands.

* * * * *

(c) Composition of Board. The 

Secretary designates one member of the 

Board as Chairperson. The Chairperson 

coordinates and directs the 

administrative activities of the Board 

and the conduct of proceedings before 

the Board. CMS provides administrative 

support for the Board. Under the 

direction of the Chairperson, the Board 

is solely responsible for the content of 

its decisions. 

(d) Quorum. (1) The Board must have 

a quorum in order to issue one of the 

decisions specified as final, or deemed 

final by the Administrator, under 

§ 405.1875(a)(2), but a quorum is not 

required for other Board actions. 

(2) Three Board members, at least one 

of who is representative of providers, 

are required in order to constitute a 

quorum. 

(3) The opinion of the majority of 

those Board members issuing a decision 

specified as final, or deemed as final by 

the Administrator, under 

§ 405.1875(a)(2) constitutes the Board’s 

decision. 

(e) Hearings. The Board may conduct 

a hearing and issue a Hearing Decision 

(see § 405.1871) on a specific matter at 

issue in an appeal, provided it finds 

jurisdiction over the matter at issue in 

accordance with § 405.1840 of this part 

and determines it has the legal authority 

to fully resolve the issue (see § 405.1867 

of this part). 

(f) Oral Hearings. (1) In accordance 

with paragraph (d) of this section, the 

Board does not need a quorum in order 

to hold an oral hearing (see § 405.1851 

of this part). The Chairperson of the 

Board may designate one or more Board 

members to conduct an oral hearing 

(where less than a quorum conducts the 

hearing). Because the presence of all 

Board members is not required at an 

oral hearing, the Board, at its discretion, 

may hold more than one oral hearing at 

a time. 

(2) Waiver of oral hearings. With the 

intermediary’s agreement and the 

Board’s approval, the provider (or, in 

the case of group appeals, the group of 

providers) and any related organizations 

(see § 405.1836 of this part) may waive 

any right to an oral hearing and 

stipulate that the Board may issue a 

Hearing Decision on the written record. 

An on-the-written-record hearing 

consists of all the evidence and written 

argument or comments must be 

submitted to the Board and included in 

the record (see § 405.1865 of this part). 

(3) Hearing decisions. The Board’s 

Hearing Decision must be based on the 

transcript of any oral hearing before the 

Board, any matter admitted into 

evidence at a hearing or deemed 

admissible evidence for the record (see 

§ 405.1855 of this part), and any written 

argument or comments timely submitted 

to the Board (see § 405.1865 of this 

part). 

(g) Remands. (1) Except as provided 

in paragraph (g)(3) of this section, a 

Board remand order may be reviewed 

solely during the course of 

Administrator review of one of the 

Board decisions specified in 

§ 405.1875(a)(2) of this part), or of 

judicial review of a final agency 

decision as described in § 405.1877(a) 

and (c)(3) of this part, as applicable. 

(2) The Board may order a remand 

requiring specific actions of a party to 

the appeal. In ordering a remand, the 

Board must—

(i) Specify any actions required of the 

party and explain the factual and legal 

basis for ordering a remand;

(ii) Be in writing; 

(iii) Be mailed promptly to the parties 

and any affected non-party, such as 

CMS, to the appeal. 

(3) A Board remand order is not 

subject to immediate Administrator 

review unless the Administrator 

determines that the remand order might 

otherwise evade his or her review. (see 

§ 405.1875(a)(2)(iv)). 

23. Section 405.1853 is revised to read 

as follows:

§ 405.1853 Board proceedings prior to any 

hearing; discovery. 

(a) Preliminary narrowing of the 

issues. Upon receiving notification that 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35757

a request for a Board hearing is 

submitted, the intermediary must: 

(1) Promptly review both the 

materials submitted with the provider 

hearing request, and the information 

underlying each intermediary or 

Secretary determination for each cost 

reporting period under appeal. 

(2) Expeditiously attempt to join with 

the provider in resolving specific factual 

or legal issues and submitting to the 

Board written stipulations setting forth 

the specific issues that remain for Board 

resolution based on the review. 

(3) Ensure that the evidence it 

considered in making its determination, 

or, where applicable, the evidence the 

Secretary considered in making his or 

her determination, is included in the 

record. 

(b) Position papers. (1) After any 

preliminary narrowing of the issues, the 

parties must file position papers in 

order to narrow the issues further. In 

each case, and as appropriate, the Board 

establishes the deadlines when the 

provider(s) and the intermediary must 

submit position papers to the Board. 

(2) The Board may extend the 

deadline for submitting a position paper 

for good cause shown. Each position 

paper must set forth the relevant facts 

and arguments regarding the Board’s 

jurisdiction over each remaining matter 

at issue in the appeal (see § 405.1840 of 

this part), and the merits of the 

provider’s Medicare payment claims for 

each remaining issue. 

(3) Any supporting exhibits regarding 

Board jurisdiction must accompany the 

position paper; exhibits regarding the 

merits of the provider’s Medicare 

payment claims may be submitted later 

in a time frame to be decided by the 

Board. 

(c) Initial status conference. (1) Upon 

review of the parties’ position papers, 

one or more members of the Board may 

conduct an initial status conference. An 

initial status conference may be 

conducted in person or telephonically, 

at the discretion of the Board. 

(2) The Board may use the status 

conference to discuss any of the 

following: 

(i) Simplification of the issues. 

(ii) The necessity or desirability of 

amendments to the pleadings, including 

the need for a more definite statement. 

(iii) Stipulations and admissions of 

fact or as to the content and authenticity 

of documents. 

(iv) If the parties can agree to 

submission of the case on a stipulated 

record. 

(v) If a party chooses to waive 

appearance at an oral hearing and to 

submit only documentary evidence (the 

admissibility of which is subject to 

objection from other parties) and written 

argument. 

(vi) Limitation of the number of 

witnesses. 

(vii) Scheduling dates for the 

exchange of witness lists and of 

proposed exhibits. 

(viii) Discovery as permitted under 

this section. 

(ix) The time and place for the 

hearing.

(x) Potential settlement of some or all 

of the issues. 

(xi) Other matters that the Board 

deems necessary and appropriate. The 

Board may issue any orders at the 

conference found necessary and 

appropriate to narrow the issues further 

and expedite further proceedings in the 

appeal. 

(3) After the status conference, the 

Board may: 

(i) Issue in writing a report and order 

specifying what transpired and 

formalizing any orders issued at the 

conference. 

(ii) Require the parties to submit 

(jointly or otherwise) a proposed report 

and order, in order to facilitate issuance 

of a final report and order. 

(d) Further status conferences. Upon 

a party’s request, or on its own motion, 

the Board may conduct further status 

conferences where it finds the 

proceedings necessary and appropriate. 

(e) Discovery—(1) General rules. (i) 

Discovery is limited in Board 

proceedings. 

(ii) The Board may permit discovery 

of a matter that is relevant to the 

specific subject matter of the Board 

hearing, provided the matter is not 

privileged or otherwise protected from 

disclosure and the discovery request is 

not unreasonable, unduly burdensome 

or expensive, or otherwise 

inappropriate. 

(iii) Any discovery initiated by a party 

must comply with all requirements and 

limitations of this section, along with 

any further requirements or limitations 

ordered by the Board. 

(iv) The applicable provisions of the 

Federal Rules of Civil Procedure and 

Rules 401 and 501 of the Federal Rules 

of Evidence serve as guidance for any 

discovery that is permitted under this 

section or by Board order. 

(2) Limitations on discovery. Any 

discovery before the Board is limited as 

follows: 

(i) A party may request of another 

party or a non-party the reasonable 

production of documents for inspection 

and copying, or may propound a 

reasonable number of interrogatories. 

(ii) A party may not take the 

deposition, upon oral or written 

examination, of another party or a nonparty, unless the proposed deponent 

agrees to the deposition or the Board 

finds that the proposed deposition is 

necessary and appropriate under the 

criteria set forth in Fed. R. Civ. P. 26 

and 32 in order to secure the deponent’s 

testimony for a Board hearing. 

(iii) A party may not request 

admissions or take any other form of 

discovery not permitted under this 

section. 

(3) Time limits. (i) A party’s discovery 

request is timely if the date of receipt of 

a request by another party or non-party, 

as applicable, is no later than 90 days 

before the scheduled starting date of the 

Board hearing, unless the Board extends 

the time upon request of the party and 

upon a showing of good cause. 

(ii) Discovery may not be conducted 

by a party any later than 45 days before 

the scheduled starting date of the Board 

hearing unless the Board finds, at the 

request of the party, good cause to 

extend the period for discovery. 

(iii) Before ruling on a request to 

extend the time for requesting discovery 

or for conducting discovery, the Board 

must give the other parties to the appeal 

and any non-party subject to a discovery 

request a reasonable period to respond 

to the extension request. 

(iv) The Board may extend the time in 

which to request discovery or conduct 

discovery only if the requesting party 

establishes that it was not dilatory or 

otherwise at fault in not meeting the 

original discovery deadline.

(v) If the Board grants the extension 

request, it must impose a new discovery 

deadline and, if necessary, reschedule 

the hearing date so that all discovery 

ends no later than 45 days before the 

hearing. 

(4) Rights of non-parties. If a 

discovery request is made of a non-party 

to the Board appeal, the non-party 

(including HHS and CMS) has the same 

rights as any party has in responding to 

a discovery request. 

(5) Motions to compel or for protective 

order.

(i) Each party is required to make a 

good faith effort to resolve or narrow 

any discovery dispute, regardless of 

whether the dispute is with another 

party or a non-party. 

(ii) A party may submit to the Board 

a motion to compel discovery that is 

permitted under this section or any 

Board order, and a party or non-party 

may submit a motion for a protective 

order regarding any discovery request to 

the Board. 

(iii) Any motion to compel or for 

protective order must include a selfsworn declaration describing the 

movant’s efforts to resolve or narrow the 

discovery dispute. 

35758 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

(iv) The declaration must be included 

with any response to a motion to 

compel or for protective order. 

(v) The Board must decide any motion 

in accordance with this section and any 

prior discovery ruling. 

(vi) The Board must issue and mail to 

each party and any affected non-party a 

discovery ruling that grants or denies 

the motion to compel or for protective 

order in whole or in part; if applicable, 

the discovery ruling must specifically 

identify any part of the disputed 

discovery request upheld and any part 

rejected, and impose any limits on 

discovery the Board finds necessary and 

appropriate. 

(6) Reviewability of discovery and 

disclosure rulings—

(i) General rule. A Board discovery 

ruling, or a Board disclosure ruling such 

as one issued at a hearing is not subject 

to immediate review by the 

Administrator (see § 405.1875(a)(3)). 

The ruling may be reviewed solely 

during the course of Administrator 

review of one of the Board decisions 

specified as final, or deemed to be final 

by the Administrator, under 

§ 405.1875(a)(2), or of judicial review of 

a final agency decision as described in 

§ 405.1877(a) and (c)(3), as applicable. 

(ii) Exception. To the extent a ruling 

authorizes discovery or disclosure of a 

matter for which an objection based on 

privilege, or other protection from 

disclosure such as case preparation, 

confidentiality, or undue burden, was 

made before the Board, that portion of 

the discovery or disclosure ruling may 

be reviewed immediately by the 

Administrator in accordance with 

§ 405.1875(a)(3)(i). Upon notice to the 

Board that a party or non-party, as 

applicable, intends to seek 

Administrator review of the ruling, the 

Board must stay all proceedings affected 

by the ruling. The Board determines the 

length of the stay under the 

circumstances of a given case, but in no 

event must the length of the stay be less 

than 15 days after the day on which the 

Board received notice of the party or 

non-party’s intent to seek Administrator 

review. If the Administrator grants a 

request for review, or takes own motion 

review, of the a ruling, the ruling is 

stayed until the time the Administrator 

issues a written decision that affirms, 

reverses, modifies, or remands the 

Board’s ruling. If the Administrator does 

not grant review or take own motion 

review within the time allotted for the 

stay, the stay is lifted and the ruling 

stands. 

24. Section 405.1857 is revised to read 

as follows:

§ 405.1857 Subpoenas. 

(a) Time limits. (1) The Board may 

issue a subpoena: 

(i) To a party to a Board appeal or to 

a non-party requiring the attendance 

and testimony of witnesses or the 

production of documents for inspection 

and copying, provided the Board makes 

a preliminary finding of its jurisdiction 

over the matters at issue in accordance 

with § 405.1840(a) of this part. 

(ii) At the request of a party for 

purposes of discovery (see § 405.1853 of 

this part) or an oral hearing (see 

§ 405.1845 of this part). 

(iii) On its own motion solely for 

purposes of a hearing. 

(2) The date of receipt by the Board 

of a party’s subpoena request may not be 

any later than: 

(i) For subpoenas requested for 

purposes of discovery, 90 days before 

the scheduled starting date of the Board 

hearing; and 

(ii) For subpoenas requested for 

purposes of an oral hearing, 45 days 

before the scheduled starting date of the 

Board hearing. 

(3) The Board may not issue a 

subpoena any later than:

(i) For purposes of a discovery 

subpoena, 75 days before the scheduled 

starting date of the Board hearing; and 

(ii) For purposes of a hearing 

subpoena, whether issued at a party’s 

request or on the Board’s own motion, 

30 days before the scheduled starting 

date of the Board hearing. 

(4) The Board may extend for good 

cause the deadlines specified in 

paragraphs (a)(2) and (a)(3) of this 

section provided the Board: 

(i) Gives each party to the appeal and 

any non-party subject to a subpoena 

request or subpoena a reasonable period 

of time to comment on any proposed 

extension. 

(ii) Finds that the party requesting the 

extension, where applicable, was not 

dilatory or otherwise at fault in not 

meeting the original subpoena 

deadlines. 

(iii) Imposes new deadlines and, if 

necessary, reschedules the hearing date 

so that all subpoena requests are 

submitted and all subpoenas issued 

within the time periods specified in 

paragraphs (a)(2) and (a)(3) of this 

section. 

(b) Criteria—(1) Discovery subpoenas.

The Board may issue a subpoena for 

purposes of discovery if: 

(i) The subpoena was requested in 

accordance with the requirements of 

paragraph (c)(1) of this section. 

(ii) The party’s discovery request 

complies with the applicable provisions 

of § 405.1853(e) of this part. 

(iii) A subpoena is necessary and 

appropriate to compel a response to the 

discovery request. 

(2) Hearing subpoenas. The Board 

may issue a subpoena for purposes of an 

oral hearing if: 

(i) If applicable, the party’s subpoena 

request meets the requirements of 

paragraph (c)(1) of this section. 

(ii) A subpoena is necessary and 

appropriate to compel the attendance 

and testimony of witnesses or the 

production of documents for inspection 

or copying, provided the testimony or 

documents are relevant and material to 

a matter at issue in the appeal but not 

unduly repetitious (see § 405.1855 of 

this part). 

(iii) The subpoena does not compel 

the disclosure of matter that is 

privileged or otherwise protected from 

disclosure for reasons such as case 

preparation, confidentiality, or undue 

burden. 

(iv) The subpoena does not impose 

undue burden or expense on the party 

or non-party subject to the subpoena, 

and is not otherwise unreasonable or 

inappropriate. 

(3) Guiding principles. In determining 

whether to issue, quash, or modify a 

subpoena under this section, the Board 

must comply with the applicable 

provisions of the Federal Rules of Civil 

Procedure and Rules 401 and 501 of the 

Federal Rules of Evidence for guidance. 

(c) Procedures—(1) Subpoena 

requests. The requesting party must 

mail any subpoena request submitted to 

the Board promptly to the party or nonparty subject to the subpoena, and to 

any other party to the Board appeal. The 

request must: 

(i) Identify with particularity any 

witnesses (and their addresses, if 

known) or any documents (and their 

location, if known) sought by the 

subpoena, and the means, time, or 

location for securing any witness 

testimony or documents. 

(ii) Describe specifically, in the case 

of a hearing subpoena, the facts any 

witnesses, documents, or tangible 

materials are expected to establish, and 

why those facts cannot be established 

without a subpoena. 

(iii) Explain why a subpoena is 

appropriate under the criteria 

prescribed in paragraph (b) of this 

section. 

(2) Contents of subpoenas. A 

subpoena issued by the Board, whether 

on its own motion or at the request of 

a party, must be in writing and either 

sent promptly by the Board to the party 

or non-party subject to the subpoena by 

certified mail or overnight delivery (and 

to any other party and affected nonVerDate jul<14>2003 20:55 Jun 24, 2004 Jkt 203001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 E:\FR\FM\25JNP2.SGM 25JNP2
Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35759

party to the appeal by regular mail), or 

hand-delivered. Each subpoena must: 

(i) Be issued in the name of the Board, 

and include the case number and name 

of the appeal. 

(ii) Provide notice that the subpoena 

is issued in accordance with section 

1878(e) of the Act, and § 405.1857 of 

this part, and that CMS must pay the 

fees and the mileage of any witnesses, 

as provided in section 205(d) of the Act. 

(iii) If applicable, require named 

witnesses to attend a particular 

proceeding at a certain time and 

location, and to testify on specific 

subjects. 

(iv) If applicable, require the 

production of specific documents for 

inspection or copying at a certain time 

and location. 

(3) Rights of non-parties. If a nonparty to the Board appeal is subject to 

the subpoena or subpoena request, the 

non-party (including HHS and CMS) has 

the same rights as any party has in 

responding to a subpoena or subpoena 

request. These rights include, but are 

not limited to, the right to select and use 

any attorney or other representative, and 

to submit responses, objections, 

motions, or any other pertinent 

materials to the Board regarding the 

subpoena or subpoena request.

(4) Board action on subpoena requests 

and motions. After issuing a subpoena 

or receiving a subpoena request, the 

Board must: 

(i) Give the party or non-party subject 

to the subpoena or subpoena request a 

reasonable period of time for the 

submission of any responses, objections, 

or motions. 

(ii) Consider the subpoena or 

subpoena request, and any responses, 

objections, or motions related thereto, 

under the criteria specified in paragraph 

(b) of this section. 

(iii) Issue in writing and mail 

promptly to each party and any affected 

non-party an order granting or denying 

any motion to quash or modify a 

subpoena, or granting or denying any 

subpoena request in whole or in part; 

and issue, if applicable, an original or 

modified subpoena in accordance with 

paragraph (c)(2) of this section. 

(d) Reviewability—(1) General rules.

(i) If the Board issues, quashes, or 

modifies, or refuses to issue, quash, or 

modify, a subpoena under paragraphs 

(c)(2) or (c)(4) of this section, the 

Board’s action is not subject to 

immediate review by the Administrator 

(see § 405.1875(a)(3) of this part). 

(ii) Any Board action may be 

reviewed solely during the course of 

Administrator review of one of the 

Board decisions specified in 

§ 405.1875(a)(2) of this part, or of 

judicial review of a final agency 

decision as described in § 405.1877(a) 

and (c)(3) of this part, as applicable. 

(2) Exception. (i) To the extent a 

subpoena compels disclosure of a matter 

for which an objection based on 

privilege, or other protection from 

disclosure such as case preparation, 

confidentiality, or undue burden, was 

made before the Board, the 

Administrator may review immediately 

that portion of the subpoena in 

accordance with § 405.1875(a)(3)(ii). 

(ii) Upon notice to the Board that a 

party or non-party, as applicable, 

intends to seek Administrator review of 

the subpoena, the Board must stay all 

proceedings affected by the subpoena. 

(iii) The Board determines the length 

of the stay under the circumstances of 

a given case, but in no event is less than 

15 days after the day on which the 

Board received notice of the party or 

non-party’s intent to seek Administrator 

review. 

(iv) If the Administrator grants a 

request for review, or takes own motion 

review, of the subpoena, the subpoena 

or portion of the subpoena, as 

applicable, is stayed until the time as 

the Administrator issues a written 

decision that affirms, reverses, modifies, 

or remands the Board’s action for the 

subpoena. 

(v) If the Administrator does not grant 

review or take own motion review 

within the time allotted for the stay, the 

stay is lifted and the Board’s action 

stands. 

(e) Enforcement. (i) If the Board 

determines, whether on its own motion 

or at the request of a party, that a party 

or non-party subject to a subpoena 

issued under this section has refused to 

comply with the subpoena, the Board 

may request the Administrator to seek 

enforcement of the subpoena in 

accordance with section 205(e) of the 

Act, 42 U.S.C. 405(e). 

(ii) Any enforcement request by the 

Board must consist of a written notice 

to the Administrator describing in detail 

the Board’s findings of noncompliance 

and its specific request for enforcement, 

and providing a copy of the subpoena 

and evidence of its receipt by certified 

mail by the party or nonparty subject to 

the subpoena.

(iii) The Board must promptly mail a 

copy of the notice and related 

documents to the party or non-party 

subject to the subpoena, and to any 

other party and affected non-party to the 

appeal. 

25. Section 405.1865 is revised to read 

as follows:

§ 405.1865 Record of administrative 

proceedings. 

(a)(1) The Board and, if applicable, 

the Administrator must maintain a 

complete record of all proceedings in 

each appeal. 

(2) For proceedings before the Board, 

the administrative record consists of all 

evidence, documents and any other 

tangible materials submitted by the 

parties to the appeal and by any nonparty (see § 405.1853(d) and 

§ 405.1857(c)(3) of this part), along with 

all Board correspondence, rulings, 

subpoenas, orders, and decisions. 

(3) The term record is intended to 

encompass both the unappended record 

and any appendix to the record (see 

§ 405.1865(b) of this part). 

(4) The record also includes a 

complete transcription of the 

proceedings at any oral hearing before 

the Board. 

(5) A copy of any transcription must 

be made available to any party upon 

written request. 

(b) Any evidence ruled inadmissible 

by the Board (see § 405.1855 of this part) 

and any other submitted matter that the 

Board declines to consider (whether as 

untimely or otherwise) must be, to the 

extent practicable, clearly identified and 

segregated in an appendix to the record 

for purposes of any further review (see 

§§ 405.1875 and 405.1877 of this part). 

(c) To the extent applicable, the 

administrative record also includes all 

documents (including written 

submissions) and any other tangible 

materials to the Administrator by the 

parties to the appeal or by any non-party 

(see § 405.1853(d) and § 405.1857(c)(3) 

of this part), in addition to all 

correspondence from the Administrator 

or the Office of the Attorney Advisor 

and all rulings, orders, and decisions by 

the Administrator. The provisions of 

paragraph (b) of this section also pertain 

to any proceedings before the 

Administrator, to the extent the 

Administrator finds evidence 

inadmissible or declines to consider 

specific matter (whether as untimely or 

otherwise).

§ 405.1867 [Amended] 

26. Section 405.1867 is amended by: 

A. Revising the section heading to 

read as follows: ‘‘Scope of Board’s legal 

authority.’’

B. Revising the introductory clause, in 

the first sentence to read as follows: ‘‘In 

exercising its authority to conduct 

proceedings under this subpart,’’. 

27. A new § 405.1868 is added to read 

as follows:

35760 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

§ 405.1868 Board actions in response to 

failure to follow Board rules. 

(a) The Board has full power and 

authority to make rules and establish 

procedures, not inconsistent with the 

law, regulations, and CMS Rulings, that 

are necessary or appropriate to carry out 

the provisions of section 1878 of the Act 

and of the regulations in this subpart. 

The Board’s powers include the 

authority to take appropriate actions in 

response to the failure of a party to a 

Board appeal to comply with Board 

rules and orders or for inappropriate 

conduct during proceedings in the 

appeal. 

(b) If a provider fails to meet a filing 

deadline or other requirement 

established by the Board in a rule or 

order, the Board may—

(1) Dismiss the appeal with prejudice; 

(2) Issue an order requiring the 

provider to show cause why the Board 

does not dismiss the appeal; or 

(3) Take any other remedial action it 

considers appropriate.

(c) If an intermediary fails to meet a 

filing deadline or other requirement 

established by the Board in a rule or 

order, the Board may take action it 

considers appropriate, such as issuing a 

written notice to the Administrator 

describing the intermediary’s actions 

and requesting that the notice be 

considered in CMS’ review of the 

intermediary’s compliance with the 

contractual requirements of § 421.120, 

§ 421.122, and § 421.124 of this chapter. 

The Board’s authority for the 

intermediary does not include reversing 

or modifying the intermediary or 

Secretary determination for the cost 

reporting period under appeal, or ruling 

against the intermediary on a disputed 

issue of law or fact in the appeal. 

(d)(1) If the Board dismisses the 

appeal with prejudice under this 

section, it must issue a Dismissal 

Decision dismissing the appeal. The 

decision by the Board must be in 

writing and include an explanation of 

the reason for the dismissal. A copy of 

the Board’s Dismissal Decision must be 

mailed promptly to each party to the 

appeal (see § 405.1843). 

(2) A Dismissal Decision by the Board 

under paragraph (f)(1) of this section is 

final and binding on the parties unless 

the decision is reversed, affirmed, 

modified, or remanded by the 

Administrator under § 405.1875(a)(2)(ii), 

paragraphs (e), and (f) of this section no 

later than 60 days after the date of 

receipt by the provider of the Board’s 

decision. The Board decision is 

inoperative during the 60-day period for 

review by the Administrator, or in the 

event the Administrator reverses, 

affirms, modifies, or remands the 

decision within the period. The Board 

may reopen final Board decision under 

paragraphs (f)(1) and (f)(2) of this 

section, in accordance with §§ 405.1885 

through 405.1889. 

(3) Any action taken by the Board 

under this section other than dismissal 

of the appeal is not subject to immediate 

Administrator review (see 

§ 405.1875(a)(3)) or judicial review (see 

§ 405.1877(a)(3)). A Board action other 

than dismissal of the appeal may be 

reviewed solely during the course of 

Administrator review of one of the 

Board decisions specified as final, or 

deemed to be final by the Administrator, 

under § 405.1875(a)(2) or of judicial 

review of a final agency decision as 

described in § 405.1877(a), as 

applicable. 

28. Section 405.1869 is revised as 

follows:

§ 405.1869 Scope of Board’s authority in a 

hearing decision. 

(a) If the Board has jurisdiction to 

conduct a hearing on a specific matter 

at issue under section 1878(a) or (b) of 

the Act and § 405.1840, and the legal 

authority to fully resolve the matter in 

a hearing decision (see § 405.1842(f)(3), 

§ 405.1867, and § 405.1871), section 

1878(d) of the Act, and paragraph (a) of 

this section, give the Board the power to 

affirm, modify, or reverse the 

intermediary’s findings on each specific 

matter at issue in the intermediary 

determination for the cost reporting 

period under appeal, and to make 

additional revisions on specific matters 

regardless of whether the intermediary 

considered the matters in issuing the 

intermediary determination. The 

Board’s power to make additional 

revisions in a hearing decision does not 

authorize the Board to consider or 

decide a specific matter at issue for 

which it lacks jurisdiction (see 

§ 405.1840(b)) or which was not timely 

raised in the provider’s hearing request. 

The Board’s power under section 

1878(d) of the Act and paragraph (a) of 

this section to make additional revisions 

is limited to those revisions necessary to 

resolve fully a specific matter at issue 

if—

(1) The Board has jurisdiction to grant 

a hearing on the specific matter at issue 

under section 1878(a) or (b) of the Act 

and § 405.1840; and 

(2) The specific matter at issue was 

timely raised in an initial request for a 

Board hearing filed in accordance with 

§ 405.1835 or § 405.1837, as applicable, 

or in a timely request to add issues to 

a single provider appeal submitted in 

accordance with § 405.1835(c). 

(b)(1) If the Board has jurisdiction to 

conduct a hearing on a specific matter 

at issue solely under § 405.1840 and 

§ 405.1835 or § 405.1837, as applicable, 

and the legal authority to fully resolve 

the matter in a hearing decision (see 

§§ 405.1842(f)(3), 405.1867, and 

405.1871), the Board is authorized to: 

(i) Affirm, modify, or reverse the 

intermediary’s or Secretary’s findings on 

each specific matter at issue in the 

intermediary or Secretary determination 

under appeal. 

(ii) Make additional revisions on each 

specific matter at issue regardless of 

whether the intermediary considered 

these revisions in issuing the 

intermediary determination under 

appeal, provided the Board does not 

consider or decide a specific matter for 

which it lacks jurisdiction (see 

§ 405.1840(b)) or that was not timely 

raised in the provider’s hearing request. 

(2) The Board’s authority under this 

section to make the additional revisions 

is limited to those revisions necessary to 

fully resolve a specific matter at issue if:

(i) The Board has jurisdiction to grant 

a hearing on the specific matter solely 

under § 405.1840 and § 405.1835 or 

§ 405.1837, as applicable. 

(ii) The specific matter at issue was 

timely raised in the request for a Board 

hearing filed in accordance with 

§ 405.1835 or § 405.1837, as applicable. 

29. Section 405.1871 is revised to read 

as follows:

§ 405.1871 Board Hearing Decision. 

(a)(1) If the Board finds jurisdiction 

over a specific matter at issue and 

conducts a hearing on the matter (see 

§ 405.1840(a) and § 405.1845(e)), the 

Board must issue a Hearing Decision 

deciding the merits of the specific 

matter at issue. 

(2) A Board Hearing Decision must be 

in writing and based on the admissible 

evidence from the Board hearing and 

other admissible evidence and written 

argument or comments as may be 

included in the record and accepted by 

the Board (see § 405.1845(f)(3) and 

§ 405.1865). 

(3) The decision must include 

findings of fact and conclusions of law 

regarding the Board’s jurisdiction over 

each specific matter at issue (see 

§ 405.1840(c)(1)), and whether the 

provider carried its burden of 

production of evidence and burden of 

proof by establishing, by a 

preponderance of the evidence, that the 

provider is entitled to relief on the 

merits of the matter at issue. 

(4) The decision must include 

appropriate citations to the record 

evidence and to the applicable law, 

regulations, CMS Rulings, and general 

CMS instructions. 

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(5) A copy of the decision must be 

mailed promptly to each party to the 

appeal. 

(b)(1) A Board Hearing Decision 

issued in accordance with paragraph (a) 

of this section is final and binding on 

the parties to the Board appeal unless 

the Hearing Decision is reversed, 

affirmed, modified, or remanded by the 

Administrator under § 405.1875(a)(2)(i), 

(e), and (f), no later than 60 days after 

the date of receipt by the provider of the 

Board’s decision. A Board Hearing 

Decision is inoperative during the 60-

day period for review of the decision by 

the Administrator, or in the event the 

Administrator reverses, affirms, 

modifies, or remands that decision 

within the period. 

(2) A Board Hearing Decision that is 

final under paragraph (b)(1) of this 

section is subject to the provisions of 

§ 405.1803(d), unless a decision is the 

subject of judicial review (see 

§ 405.1877). 

(3) A final Board decision under 

paragraph (a) and (b)(1) of this section 

may be reopened by the Board in 

accordance with §§ 405.1885 through 

405.1889.

§ 405.1873 [Removed]. 

30. Section 405.1873 is removed. 

31. Section 405.1875 is revised to read 

as follows:

§ 405.1875 Administrator review. 

(a) Basic rule; time limit for rendering 

Administrator decisions; Board 

decisions and action subject to 

immediate review. The Administrator, at 

his or her discretion, may immediately 

review any decision of the Board 

specified in paragraph (a)(2) of this 

section. Non-final decisions or actions 

by the Board are not immediately 

reviewable, except as provided in 

paragraph (a)(3) of this section. The 

Administrator may exercise this 

discretionary review authority on his or 

her own motion, or in response to a 

request from: A party to the Board 

appeal; CMS; or, in the case of a matter 

specified in paragraph (a)(3)(i) or 

(a)(3)(ii) of this section, another affected 

non-party to a Board appeal. All 

requests for Administrator review and 

any other submissions to the 

Administrator under paragraph (c) of 

this section must be sent to the Office 

of the Attorney Advisor. The Office of 

the Attorney Advisor must examine 

each Board decision specified in 

paragraph (a)(2) of this section, and each 

matter described in §§ 405.1845(g)(3), 

405.1853(e)(2), or 405.1857(d)(2), of 

which it becomes aware, together with 

any review requests or any other 

submission made in accordance with 

the provisions of this section, in order 

to assist the Administrator’s exercise of 

this discretionary review authority. The 

Board is required to send to the Office 

of the Attorney Advisor a copy of each 

decision specified in paragraphs (a)(2)(i) 

and (a)(2)(iii) of this section upon 

issuance of the decision. 

(1) The date of rendering any decision 

after the review by the Administrator 

must be no later than 60 days after the 

date of receipt by the provider of a 

reviewable Board decision or action. For 

purposes of this section, the date of 

rendering is the date the Administrator 

signs the decision, and not the date the 

decision is mailed or otherwise 

transmitted to the parties. 

(2) The Administrator may 

immediately review: 

(i) A Board Hearing Decision (see 

§ 405.1871). 

(ii) A Board Dismissal Decision (see 

§ 405.1836(e)(1) and (e)(2), 

§ 405.1840(c)(2) and (c)(3), 

§ 405.1868(d)(1) and (d)(2)).

(iii) A Board Expedited Judicial 

Review Decision, but only the question 

of whether there is Board jurisdiction 

over a specific matter at issue in the 

decision; the Administrator may not 

review the Board’s determination in a 

decision of its authority to decide a legal 

question relevant to the matter at issue 

(see § 405.1842(h)). 

(iv) Any other Board decision or 

action deemed to be final by the 

Administrator. 

(3) Any decision or action by the 

Board not specified in paragraph 

(a)(2)(i) through (a)(2)(iii) of this section, 

or not deemed to be final by the 

Administrator under paragraph (a)(2)(iv) 

of this section, is non-final and not 

subject to Administrator review until 

the Board issues one of the decisions 

specified in paragraph (a)(2) of this 

section, except the Administrator may 

review immediately the following 

matters: 

(i) A Board ruling authorizing 

discovery or disclosure of a matter for 

which an objection was made based on 

privilege or other protection from 

disclosure such as case preparation, 

confidentiality, or undue burden (see

§ 405.1853(e)(2)). 

(ii) A Board subpoena compelling 

disclosure of a matter for which an 

objection was made based on privilege 

or other protection from disclosure such 

as case preparation, confidentiality, or 

undue burden (see § 405.1857(d)(2)). 

(b) Illustrative list of criteria for 

deciding whether to review. In deciding 

whether to review a Board decision or 

other matter specified in paragraphs 

(a)(2) and (a)(3) of this section, either on 

his or her own motion or in response to 

a request for review, the Administrator 

considers criteria such as whether it 

appears that: 

(1) The Board made an erroneous 

interpretation of law, regulation, CMS 

Ruling, or general CMS instructions. 

(2) Any Board hearing decision meets 

the requirements of § 405.1871(a). 

(3) The Board erred in refusing to 

admit certain evidence or in not 

considering other submitted matter (see

§ 405.1855 and § 405.1865(b)), or in 

admitting certain evidence or 

considering other submitted matter. 

(4) The case presents a significant 

policy issue having a basis in law and 

regulations, and review is likely to lead 

to the issuance of a CMS Ruling or other 

directive needed to clarify a statutory or 

regulatory provision. 

(5) The Board has incorrectly found, 

assumed, or denied jurisdiction over a 

specific matter at issue or extended its 

authority in a manner not provided for 

by statute, regulation, CMS Ruling, or 

general CMS instructions. 

(6) The decision or other action of the 

Board requires clarification, 

amplification, or an alternative legal 

basis. 

(7) A remand to the Board may be 

necessary or appropriate under the 

criteria prescribed in paragraph (f) of 

this section. 

(c) Procedures—(1) Review requests. 

A party to the Board appeal or CMS may 

request Administrator review of a Board 

decision specified in paragraph (a)(2) of 

this section or a matter described in 

paragraph (a)(3) of this section. A nonparty other than CMS may request 

Administrator review solely of a matter 

described in paragraph (a)(3)(i) or 

(a)(3)(ii) of this section. The date of 

receipt by the Office of Attorney 

Advisor of any review request must be 

no later than 15 days after the date the 

party or non-party making the request 

received the Board’s decision or other 

reviewable action. 

(2) Exception. If a party, or nonparty, 

as applicable, seeks immediate review 

of a matter described in 

§ 405.1875(a)(3)(i) or (a)(3)(ii), the 

request for review must be made as soon 

as practicable, but in no event later than 

5 business days after the day the party 

or non-party seeking review received 

notice of the ruling or subpoena. 

(i) The request must state the 

reason(s) why the ruling was in error 

and the potential harm that may be 

caused if immediate review is not 

granted. 

(ii) A party or CMS may respond to 

a request for Administrator review. 

(iii) A request for review (or a 

response to a request) must be 

submitted in writing, identify the 

35762 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

specific issues for which review is 

requested, and explain why review is or 

is not appropriate, under the criteria 

specified in paragraph (b) of this section 

or for some other reason. 

(iv) A copy of any review request (or 

response to a request) must be mailed 

promptly to each party to the appeal, 

the Office of the Attorney Advisor, and, 

as applicable, CMS, and any other 

affected non-party. 

(3) Notice of review. When the 

Administrator decides to review a Board 

decision or other matter specified in 

paragraphs (a)(2) or (a)(3) of this section, 

respectively, whether on his or her own 

motion or upon request, the 

Administrator must send a written 

notice to the parties, CMS, and any 

other affected non-party stating that the 

Board’s decision is reviewed, and 

indicating the specific issues that is 

considered. The Administrator may 

decline to review a Board decision or 

other matter, or any issue in a decision 

or matter, even if a request for review 

is submitted in accordance with 

paragraph (c)(1) of this section. 

(4) Written submissions on review. If 

the Administrator accepts review of the 

Board’s decision or other reviewable 

action, a party, CMS, or, another 

affected non-party that properly 

requested review, may render written 

submissions regarding the review. The 

date of receipt by the Office of the 

Attorney Advisor of any material must 

be no later than 15 days after the date 

the party, CMS or other affected nonparty submitting comments received the 

Administrator’s notice under paragraph 

(c)(3) of this section, taking review of 

the Board decision or other reviewable 

matter. Any submission must be limited 

to the issues accepted for Administrator 

review (as identified in the notice) and 

be confined to the record of Board 

proceedings (see § 405.1865). The 

submission may include: 

(i) Argument and analysis supporting 

or taking exception to the Board’s 

decision or other reviewable action;

(ii) Supporting reasons, including 

legal citations and excerpts of record 

evidence, for any argument and analysis 

submitted under paragraph (c)(3)(i) of 

this section; 

(iii) Proposed findings of fact and 

conclusions of law; 

(iv) Rebuttal to any written 

submission filed previously with the 

Administrator in accordance with 

paragraph (c)(3) of this section; or 

(v) A request, with supporting 

reasons, that the decision of other 

reviewable action be remanded to the 

Board. 

(d) Ex parte communications 

prohibited. All communications from 

any party, CMS, or other affected nonparty, concerning a Board decision (or 

other reviewable action) that is being 

reviewed or may be reviewed by the 

Administrator, must be in writing and 

must contain a certification that copies 

were served on all other parties, CMS, 

and any other affected non-party, as 

applicable. The communications 

include, but are not limited to, requests 

for review and responses to requests for 

review submitted under paragraph (c)(1) 

of this section, and written submissions 

regarding review submitted under 

paragraph (c)(3) of this section. The 

Administrator does not consider any 

communication that does not meet these 

requirements or is not submitted within 

the required time limits. 

(e) Administrator’s decision. (1) Upon 

completion of any review, the 

Administrator provides a written 

decision that: 

(i) For purposes of review of a Board 

decision specified in paragraph (a)(2) of 

this section, affirms, reverses, or 

modifies the Board’s decision, or 

vacates that decision and remands the 

case to the Board for further proceedings 

in accordance with paragraph (f)(1)(i) of 

this section; or 

(ii) For purposes of review of a matter 

described in paragraph (a)(3) of this 

section, affirms, reverses, modifies, or 

remands the Board’s remand order, 

discovery ruling, or subpoena, as 

applicable, and remands the case to the 

Board for further proceedings in 

accordance with paragraph (f)(1)(ii) of 

this section. 

(2) The date of rendering any decision 

by the Administrator must be no later 

than 60 days after the date of receipt by 

the provider of the Board’s decision or 

other reviewable action. The 

Administrator must promptly mail a 

copy of his or her decision to the Board, 

to each party to the appeal, to CMS, and, 

if applicable, to any other affected nonparty. 

(3) Any decision by the Administrator 

must be based on: 

(i) Applicable provisions of the law, 

regulations, CMS Rulings, and general 

CMS instructions. 

(ii) Prior decisions of the Board, the 

Administrator, and the courts, and any 

other law that the Administrator finds 

applicable, whether or not cited in 

materials submitted to the 

Administrator. 

(iii) The administrative record for the 

case (see § 405.1865). 

(iv) Generally known facts that are not 

subject to reasonable dispute. 

(4) A timely decision by the 

Administrator that affirms, reverses, or 

modifies one of the Board decisions 

specified in paragraph (a)(2) of this 

section is final and binding on each 

party to the Board appeal (see 

§ 405.1877(a)(4)). If the final 

Administrator decision follows review 

of a Board Hearing Decision, the 

Administrator’s decision is subject to 

the provisions of § 405.1803(d) unless 

that final decision is the subject of 

judicial review (see § 405.1877). The 

Administrator in accordance with 

§ 405.1885 through § 405.1889 may 

reopen a final Administrator decision. A 

decision by the Administrator 

remanding a matter to the Board for 

further proceedings in accordance with 

paragraph (f) of this section is not a final 

decision for purposes of judicial review 

(see § 405.1877(a)(4)) or the provisions 

of § 405.1803(d). 

(f) Remand. (1) A remand to the Board 

by the Administrator has the effect for 

purposes of review: 

(i) A Board decision specified in 

paragraph (a)(2) of this section, vacating 

the Board’s decision and requiring 

further proceedings in accordance with 

the Administrator’s decision and this 

subpart; or 

(ii) A matter described in paragraph 

(a)(3) of this section, affirming, 

reversing, modifying, or remanding the 

Board’s remand order, discovery ruling, 

or subpoena, as applicable, and 

returning the case to the Board for 

further proceedings in accordance with 

the Administrator’s decision and this 

subpart. 

(2) The Administrator may direct the 

Board to take further action for the 

development of additional facts or new 

issues, or to consider the applicability of 

laws or regulations other than those 

considered by the Board. The following 

are not acceptable bases for remand:

(i) Presentation of evidence existing at 

the time of the Board hearing that was 

known or reasonably may be known. 

(ii) Introduction of a favorable court 

ruling, regardless of whether the ruling 

was made or was available at the time 

of the Board hearing or at the time the 

Board issued its decision. 

(iii) Change in a party’s 

representation, regardless when made. 

(iv) Presentation of an alternative 

legal basis concerning an issue in 

dispute. 

(v) Attempted retraction of a waiver of 

a right, regardless when made. 

(3) After remand, the Board must take 

the actions required in the 

Administrator’s remand order and issue 

a new decision in accordance with 

paragraph (f)(1)(i) of this section, or 

issue under paragraph (f)(1)(ii) of this 

section an initial decision or a further 

remand order, discovery ruling, or 

subpoena ruling, as applicable. 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35763

(4) Administrator review of any 

decision or other action by the Board 

after remand is, to the extent applicable, 

subject to the provisions of paragraphs 

(a)(2) or (a)(3) of this section. 

(5) Besides ordering a remand to the 

Board, the Administrator may order a 

remand to any component of HHS or 

CMS or to an intermediary under 

appropriate circumstances, including, 

but not limited to, for the purpose of 

effectuating a court order (see 

§ 405.1877(g)(2)). 

32. Section 405.1877 is revised to read 

as follows:

§ 405.1877 Judicial review. 

(a) Basis and scope. (1) 

Notwithstanding the provisions of 5 

U.S.C. 704 or any other provision of 

law, sections 205(h) and 1872 of the Act 

provide that a decision or other action 

by a reviewing entity is subject to 

judicial review solely to the extent 

authorized by section 1878(f)(1) of the 

Act. This section, along with the 

expedited judicial review provisions of 

§ 405.1842, implements section 

1878(f)(1) of the Act. 

(2) Section 1878(f)(1) of the Act 

provides that a provider has a right to 

obtain judicial review of a final decision 

of the Board, or of a timely reversal, 

affirmation, or modification by the 

Administrator of a final Board decision, 

by filing a civil action in accordance 

with the Federal Rules of Civil 

Procedure in a Federal district court 

with venue no later than 60 days after 

the date of receipt by the provider of a 

final Board decision or a reversal, 

affirmation, or modification by the 

Administrator. The Secretary of Health 

and Human Services (and not the 

Administrator or CMS itself, or the 

intermediary) is the only proper 

defendant in a civil action brought 

under section 1878(f)(1). 

(3) A Board decision is final and 

subject to judicial review under section 

1878(f)(1) of the Act only if the 

decision—

(i) Is one of the Board decisions 

specified in § 405.1875(a)(2)(i) through 

(a)(2)(iii) or, in a particular case, is 

deemed to be final by the Administrator 

under § 405.1875(a)(2)(iv); and 

(ii) Is not reversed, affirmed, 

modified, or remanded by the 

Administrator under § 405.1875(e) and 

(f) within 60 days of the date of receipt 

by the provider of the Board’s decision. 

A provider is not required to seek 

Administrator review under § 405.1875 

first in order to seek judicial review of 

a Board decision that is final and subject 

to judicial review under section 

1878(f)(1) of the Act. 

(4) If the Administrator timely 

reverses, affirms, or modifies one of the 

Board decisions specified in 

§ 405.1875(a)(2)(i) through (a)(2)(iii) or 

deemed to be final by the Administrator 

in a particular case under 

§ 405.1875(a)(2)(iv), the Administrator’s 

reversal, affirmation, or modification is 

the only decision subject to judicial 

review under section 1878(f)(1) of the 

Act. A remand of a Board decision by 

the Administrator to the Board vacates 

the decision; neither the Board’s 

decision nor the Administrator’s 

remand is a final decision subject to 

judicial review under section 1878(f)(1) 

of the Act (see § 405.1875(e)(4), (f)(1), 

and (f)(4)). 

(b) Determining when a civil action 

may be filed—

(1) General rule. Under section 

1878(f)(1) of the Act, the 60-day periods 

for Administrator review of a decision 

by the Board, and for judicial review of 

any final Board decision, respectively, 

both begin to run on the same day. 

Paragraphs (b)(2), (b)(3) and (b)(4) of this 

section identify how various actions or 

inaction by the Administrator within 

the 60-day review period determine the 

scope and timing of any right a provider 

may have to judicial review under 

section 1878(f)(1) of the Act.

(2) Administrator declines review. If 

the Administrator declines any review 

of a Board decision specified in 

§ 405.1875(a)(2), whether through 

inaction or in a written notice issued 

under § 405.1875(c)(2), the provider 

must file any civil action seeking 

judicial review of the Board’s final 

decision under section 1878(f)(1) of the 

Act no later than 60 days after the date 

of receipt by the provider of the Board’s 

decision. 

(3) Administrator accepts review and 

renders timely decision. Where the 

Administrator decides to review, in a 

notice under § 405.1875(c)(2), any issue 

in a Board decision specified as final, or 

deemed as final by the Administrator, 

under § 405.1875(a)(2) and he or she 

subsequently makes a decision within 

the 60-day review period (see 

§ 405.1875(a)(1)), the provider has no 

right to obtain judicial review under 

section 1878(f)(1) of the Act of the 

Board’s decision. If the Administrator 

timely reverses, affirms, or modifies the 

Board’s decision, the provider’s only 

right under section 1878(f)(1) of the Act 

is to request judicial review of the 

Administrator’s decision by filing a civil 

action no later than 60 days after the 

date of receipt by the provider of the 

Administrator’s decision (see 

§ 405.1877(a)(3)). If the Administrator 

timely vacates the Board’s decision and 

remands for further proceedings (see 

§ 405.1875(f)(1)(i)), a provider has no 

right to judicial review under section 

1878(f)(1) of the Act of the Board’s 

decision or of the Administrator’s 

remand (see § 405.1877(a)(3)). 

(4) Administrator accepts review and 

timely decision is not rendered. If the 

Administrator decides to review, in a 

notice under § 405.1875(c)(2), any issue 

in a Board decision specified as final, or 

deemed to be final by the Administrator, 

under § 405.1875(a)(2), but he or she 

does not render a decision within the 

60-day review period, this subsequent 

inaction constitutes an affirmation of 

the Board’s decision by the 

Administrator. In this case, the provider 

must file any civil action requesting 

judicial review of the Administrator’s 

final decision under section 1878(f)(1) 

of the Act no later than 60 days after the 

expiration of the 60-day period for a 

decision by the Administrator under 

§ 405.1875(a)(1) and § 405.1875(e)(2). 

(c) Statutory limitations on and 

preclusion of judicial review. The Act 

limits or precludes judicial review of 

certain matters at issue. Limitations on 

and preclusions of judicial review 

include the following: 

(1) A finding in an intermediary 

determination that expenses incurred 

for items and services furnished by a 

provider to an individual are not 

payable under title XVIII of the Act 

because those items or services are 

excluded from coverage under section 

1862 of the Act, and § 411.15 of this 

chapter, is not reviewable by the Board 

(see § 405.1840(b)(1)) and is not subject 

to judicial review under section 

1878(f)(1) of the Act; the finding is 

subject to judicial review solely in 

accordance with the applicable 

provisions of sections 1155, 1869, and 

1879(d) of the Act, and of subparts G 

and H of part 405 and subpart B of part 

473, as applicable. 

(2) Certain matters affecting payments 

to hospitals under the prospective 

payment system are completely 

removed from administrative and 

judicial review, as provided in section 

1886(d)(7) of the Act, and § 405.1804 

and § 405.1840(b)(2). 

(3) Any Board remand order, or 

discovery ruling or subpoena specified 

in § 405.1875(a)(3)(i) through (a)(3)(ii), 

or a decision by the Administrator 

following immediate review of a Board 

remand order, discovery ruling, or 

subpoena, is not subject to immediate 

judicial review under section 1878(f)(1) 

of the Act. Judicial review of all nonfinal Board actions, including any such 

Board remand order, discovery ruling, 

and, except as provided in 

§ 405.1857(e), subpoena, is limited to 

35764 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

review of a final agency decision as 

described in § 405.1877(a).

(d) Group appeals. If a final decision 

is issued by the Board or rendered by 

the Administrator, as applicable, in any 

group appeal brought under § 405.1837, 

those providers in the group appeal that 

seek judicial review of the final decision 

under section 1878(f)(1) of the Act must 

file a civil action as a group (see 

§ 405.1877(e)(2)) for the specific matter 

at issue and common factual or legal 

question that was addressed in the final 

agency decision in the group appeal. 

(e) Venue for civil actions. (1) Single 

provider appeals. A civil action under 

section 1878(f)(1) of the Act requesting 

judicial review of a final decision of the 

Board or the Administrator, as 

applicable, in a single provider appeal 

under § 405.1835 must be brought in the 

District Court of the United States for 

the judicial district in which the 

provider is located or in the United 

States District Court for the District of 

Columbia. 

(2) Group appeals. A civil action 

under section 1878(f)(1) of the Act 

seeking judicial review of a final 

decision of the Board or the 

Administrator, as applicable, in a group 

appeal under § 405.1837 must be 

brought in the District Court of the 

United States for the judicial district in 

which the greatest number of providers 

participating in both the group appeal 

and the civil action are located or in the 

United States District Court for the 

District of Columbia. 

(f) Service of process. Process must be 

served as described under 45 CFR part 

4. 

(g) Remand by a court—(1) General 

rule. Under section 1874 of the Act, and 

§ 421.5(b) of this chapter, the Secretary 

is the real party in interest in a civil 

action seeking relief under title XVIII of 

the Act. The Secretary has delegated to 

the Administrator the authority under 

section 1878(f)(1) of the Act to review 

decisions of the Board and, as 

applicable, render a final agency 

decision. If a court, in a civil action 

brought by a provider against the 

Secretary as the real party in interest 

regarding a matter pertaining to 

Medicare payment to the provider, 

orders a remand for further action by the 

Secretary, any component of HHS or 

CMS, or the intermediary, a remand 

order must be deemed, except as 

provided in paragraph (g)(3) of this 

section, to be directed to the 

Administrator in the first instance, 

regardless of whether the court’s 

remand order refers to the Secretary, the 

Administrator, the Board, any other 

component of HHS or CMS, or the 

intermediary.

(2) Exception. The provisions of 

paragraphs (g)(2) and (g)(3) of this 

section do not apply to the extent they 

may be inconsistent with the court’s 

remand order or any other order of the 

court regarding the civil action. 

(3) Procedures. (i) Upon receiving 

notification of a court remand order, the 

Administrator must prepare an 

appropriate remand order and, if 

applicable, file the order in any Board 

appeal at issue in the civil action. 

(ii) The Administrator’s remand order 

must describe the specific requirements 

of the court’s remand order; require 

compliance with those requirements by 

the pertinent component of HHS or 

CMS or by the intermediary, as 

applicable; and remand the matter to the 

appropriate entity for further action. 

(iii) After the entity named in the 

Administrator’s remand order completes 

its response to that order, the entity’s 

response after remand is subject to 

further proceedings before the Board or 

the Administrator, as applicable, in 

accordance with this subpart. For 

example, if the intermediary issues a 

revised intermediary determination after 

remand, the provider may request a 

Board hearing on the revised 

determination (see § 405.1803(d) and 

§ 405.1889); or, if the intermediary 

hearing officer(s) or the Board issues a 

new decision after remand, a decision 

may be reviewed by a CMS reviewing 

official or the Administrator, 

respectively (see § 405.1834, 

§ 405.1875(f)(4)). 

(h) Implementation of final court 

judgment. (1) Where a final, nonappealable court judgment is issued in 

a civil action brought by a provider 

against the Secretary as the real party in 

interest regarding a matter affecting 

Medicare payment, a court judgment is 

subject to the provisions of 

§ 405.1803(d). 

(2) The provisions of paragraph (h)(1) 

of this section do not apply to the extent 

they may be inconsistent with the 

court’s final judgment or any other order 

of a court regarding the civil action. 

33. Section 405.1885 is revised to read 

as follows:

§ 405.1885 Reopening an intermediary 

determination or reviewing entity decision. 

(a) Overview. (1) A Secretary 

determination, a intermediary 

determination, or a decision by a 

reviewing entity (see § 405.1801(a)) may 

be reopened, for findings on matters at 

issue in a determination or decision, by 

the intermediary or by the applicable 

reviewing entity, respectively.

(2) A determination or decision may 

be reopened either through own motion 

of CMS (for Secretary determinations), 

the intermediary or reviewing entity, by 

notifying the parties to the 

determination or decision (as specified 

in § 405.1887), or by granting the 

request of the provider affected by the 

determination or decision. 

(3) An intermediary’s discretion to 

reopen or not reopen a matter is subject 

to a contrary directive from CMS to 

reopen or not reopen that matter. 

(4) If CMS directs an intermediary to 

reopen a matter, reopening is 

considered an own motion reopening by 

the intermediary. A reopening may 

result in a revision of any matter at issue 

in the determination or decision. 

(5) If a matter is reopened and a 

revised determination or decision 

provided, a revised determination or 

decision is appealable to the extent 

provided in § 405.1889. 

(6) A determination or decision to 

reopen or not to reopen a determination 

or decision is not a final determination 

or decision within the meaning of this 

subpart and is not subject to further 

administrative review or judicial 

review. 

(b) Time limits. (1) An own motion 

reopening is timely only if the notice of 

intent to reopen is mailed no later than 

3 years after the date of the 

determination or decision that is the 

subject of the reopening. The date the 

notice is mailed is presumed to be the 

date indicated on the notice unless it is 

shown by a preponderance of the 

evidence that the notice was mailed on 

a later date. 

(2) A reopening made upon request is 

timely only if the request to reopen is 

received by CMS, the intermediary, or 

reviewing entity, as appropriate, no later 

than 3 years after the date of the 

determination or decision that is the 

subject of the requested reopening. The 

date of receipt by CMS, the 

intermediary, or the reviewing entity of 

the request to reopen is presumed to be 

the date stamped ‘‘Received’’ unless it is 

shown by a preponderance of the 

evidence that CMS, the intermediary, or 

the reviewing entity received the 

request on an earlier date. A request to 

reopen does not toll the time in which 

to appeal an otherwise appealable 

determination or decision. 

(3) No Secretary or intermediary 

determination, or decision by a 

reviewing entity, may be reopened after 

the 3-year period specified in 

paragraphs (b)(1) and (b)(2) of this 

section, except as follows: A Secretary 

or intermediary determination or 

decision by the reviewing entity may be 

reopened and revised at any time if it is 

established that the determination or 

decision was procured by fraud or 

Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 35765

similar fault of any party to the 

determination or decision. 

(c) Jurisdiction for reopening.

Jurisdiction for reopening an 

intermediary determination or 

intermediary hearing decision rests 

exclusively with the intermediary or 

intermediary hearing officer(s) that 

rendered the determination or decision 

(or, where applicable, with the 

successor intermediary), subject to a 

directive from CMS to reopen or not 

reopen the determination or decision. 

Jurisdiction for reopening a Secretary 

determination, CMS reviewing official 

decision, a Board decision, or an 

Administrator decision rests exclusively 

with CMS, the CMS reviewing official, 

Board or Administrator, respectively. 

(1) CMS-directed reopenings. CMS 

may direct an intermediary or 

intermediary hearing officer(s) to reopen 

and revise any matter, subject to the 

time limits specified in paragraph (b) of 

this section, and subject to the 

limitation expressed in paragraph (c)(2) 

of this section, by providing explicit 

direction to the intermediary or 

intermediary hearing officer(s) to reopen 

and revise. 

(i) Examples. An intermediary 

determination or intermediary hearing 

decision must be reopened and revised 

if CMS provides explicit notice to the 

intermediary that the intermediary 

determination or the intermediary 

hearing decision is inconsistent with the 

applicable law, regulations, CMS ruling, 

or CMS general instructions in effect, 

and as CMS understood those legal 

provisions, at the time the 

determination or decision was rendered 

by the intermediary. CMS may direct 

the intermediary to reopen a particular 

intermediary determination or decision 

in order to implement a final agency 

decision (see § 405.1833, § 405.1871(b), 

§ 405.1875, § 405.1877(a)), a final, nonappealable court judgment, or an 

agreement to settle an administrative 

appeal or a lawsuit, regarding the same 

determination or decision. 

(ii) [Reserved] 

(2) Prohibited reopenings. A change of 

legal interpretation or policy by CMS in 

a regulation, CMS ruling, or CMS 

general instruction, whether made in 

response to judicial precedent or 

otherwise, is not a basis for reopening 

a CMS or intermediary determination, 

an intermediary hearing decision, a 

CMS reviewing official decision, a 

Board decision, or an Administrator 

decision, under this section.

(3) Reopening by CMS or intermediary 

of determination currently on appeal to 

the Board. CMS or an intermediary may 

reopen, on its own motion or on request 

of the provider(s), a Secretary or 

intermediary determination that is 

currently pending on appeal before the 

Board. The scope of the reopening may 

include any matter covered by the 

determination, including those specific 

matters that are appealed to the Board 

or the Administrator. The intermediary 

must send a copy of the notice required 

under § 405.1887(a) to the Board 

specifically informing that matter(s) to 

be addressed by the reopening are 

currently under appeal to the Board or 

are covered by the same determination 

that is under appeal. 

(4) Reopening by intermediary of 

determination within the time for 

appealing that determination to the 

Board. CMS or an intermediary may 

reopen, on its own motion or on request 

of the provider(s), Secretary or 

intermediary determination for which 

no appeal was taken to the Board, but 

for which the time to appeal to the 

Board has not yet expired, by sending 

the notice specified in § 405.1887(a). 

34. Section 405.1887 is revised to read 

as follows:

§ 405.1887 Notice of reopening; effect of 

reopening. 

(a) In exercising its reopening 

authority under § 405.1885, CMS (for 

Secretary determinations), the 

intermediary or the reviewing entity, as 

applicable, must provide written notice 

to all parties to the determination or 

decision that is the subject of the 

reopening. Notices of reopening by a 

CMS reviewing official or the Board also 

must be sent promptly to the 

Administrator. For additional notice 

requirements for intermediary 

reopenings of determinations that are 

currently pending before the Board or 

the Administrator see §§ 405.1885(c)(3) 

and (c)(4). 

(b) Upon receipt of the notice required 

under § 405.1887(a), the parties to the 

prior Secretary or intermediary 

determination or decision by a 

reviewing entity, as applicable, must be 

allowed a reasonable period of time in 

which to present any additional 

evidence or argument in support of their 

positions. 

(c) Upon concluding its reopening, 

CMS, the intermediary or the reviewing 

entity, as applicable, must provide 

written notice promptly to all parties to 

the determination or decision that is the 

subject of the reopening, informing the 

parties as to what matter(s), if any, is 

revised, with a complete explanation of 

the basis for any revision. 

(d) A reopening by itself does not 

extend appeal rights. Any matter that is 

reconsidered during the course of a 

reopening but is not revised is not 

within the proper scope of an appeal of 

a revised determination or decision (see 

§ 405.1889). 

35. Section 405.1889 is revised to read 

as follows:

§ 405.1889 Effect of a revision; issuespecific nature of appeals of revised 

determinations and decisions. 

(a) If a revision is made in a Secretary 

or intermediary determination or a 

decision by a reviewing entity after the 

determination or decision is reopened 

as provided in § 405.1885, the revision 

must be considered a separate and 

distinct determination or decision to 

which the provisions of § 405.1811, 

§ 405.1834, § 405.1835, § 405.1837, 

§ 405.1875, § 405.1877 and § 405.1885 

are applicable. 

(b) Only those matters that are 

specifically revised in a revised 

determination or decision are within the 

scope of any appeal of the revised 

determination or decision; any matter 

that is not specifically revised 

(including any matter that was reopened 

but not revised) may not be considered 

in any appeal of the revised 

determination or decision.

PART 413—PRINCIPLES OF 

REASONABLE COST 

REIMBURSEMENT; PAYMENT FOR 

END-STAGE RENAL DISEASE 

SERVICES; OPTIONAL 

PROSPECTIVELY DETERMINED 

PAYMENT RATES FOR SKILLED 

NURSING FACILITIES 

36. The authority citation for part 413 

continues to read as follows:

Authority: Secs. 1102, 1861(v)(1)(A), and 

1871 of the Social Security Act (42 U.S.C. 

1302, 1395x(v)(1)(A), and 1395hh).

36a. The heading for part 413 is 

revised to read as set forth above.

§ 413.30 [Amended] 

37. The last sentence in paragraph 

(c)(1) of § 413.30 is revised to read as 

follows:

* * * * *

(c) * * *

(1) * * * The time required for CMS 

to review the request is considered good 

cause for the granting of an extension of 

the time limit for requesting an 

intermediary hearing or a Provider 

Reimbursement Review Board (Board) 

hearing as specified in § 405.1813 and 

§ 405.1836 of this chapter, respectively.

* * * * *

§ 413.40 [Amended] 

38. Paragraph (e)(5) of § 413.40 is 

revised to read as follows:

* * * * *

(e) * * *

(5) Extending the time limit for review 

of NPR. The time required to review the 

35766 Federal Register / Vol. 69, No. 122 / Friday, June 25, 2004 / Proposed Rules 

request is considered good cause for the 

granting of an extension of the time 

limit for requesting an intermediary 

hearing or a Board hearing as specified 

in § 405.1813 and § 405.1836 of this 

chapter, respectively.

* * * * *

§ 413.64 [Amended] 

39. The last sentence in paragraph 

(j)(1) of § 413.64 is revised to read as 

follows:

* * * * *

(j) * * *

(1) * * * The interest begins to 

accrue on the first day of the first month 

following the 180-day period described 

in § 405.1835(a)(3)(i) or (a)(3)(ii) of this 

chapter, as applicable.

* * * * *

PART 417—HEALTH MAINTENANCE 

ORGANIZATIONS, COMPETITIVE 

MEDICAL PLANS, AND HEALTH CARE 

PREPAYMENT PLANS 

40. The authority citation for part 417 

continues to read as follows:

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh), secs. 1301, 1306, and 1310 of the 

Public Health Service Act (42 U.S.C. 300e, 

300e–5, and 300e–9); and 31 U.S.C. 9701.

§ 417.576 [Amended] 

41. Section 417.576 is amended as 

follows: 

a. In paragraph (d)(4), remove the 

phrase ‘‘a hearing in accordance with 

subpart R of part 405 of this chapter.’’

and add, in its place, ‘‘a hearing in 

accordance with the requirements 

specified in § 405.1801(b)(2) of this 

chapter.’’

b. In paragraph (e)(2), remove the 

phrase ‘‘a hearing under subpart R of 

part 405 of this chapter.’’ and add, in its 

place ‘‘a hearing in accordance with the 

requirements specified in 

§ 405.1801(b)(2) of this chapter.’’

§ 417.810 [Amended] 

42. Section 417.810 is amended as 

follows: 

a. In paragraph (c)(2), remove the 

phrase ‘‘a hearing as provided in part 

405, subpart R of this chapter.’’ and add, 

in its place, ‘‘a hearing in accordance 

with the requirements specified in 

§ 405.1801(b)(2) of this chapter.’’

b. In paragraph (d)(3), remove the 

phrase ‘‘a hearing on the determination 

under the provisions of part 405, 

subpart R of this chapter.’’ and add, in 

its place, ‘‘a hearing in accordance with 

the requirements specified in 

§ 405.1801(b)(2) of this chapter.’’

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance)

Dated: June 5, 2003. 

Thomas A. Scully, 

Administrator, Centers for Medicare & 

Medicaid Services.

Approved: February 4, 2004. 

Tommy G. Thompson, 

Secretary.

Editorial Note: This document was 

received in the Office of the Federal Reister 

on June 8, 2004.

[FR Doc. 04–13246 Filed 6–24–04; 8:45 am] 

BILLING CODE 4120–01–P