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                              2022
                              Tactile Systems Technology Inc., DAB CR6206 (2022)
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Tactile Systems Technology Inc., DAB CR6206 (2022)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Civil Remedies Division





Tactile Systems Technology Inc.
(NPI: 1871065599 / PTAN: 5603680002),
Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-22-548Decision No. CR6206December 21, 2022

        
              
    

      DECISION

The Centers for Medicare & Medicaid Services (CMS), through its Medicare administrative contractor, Palmetto GBA (Palmetto), revoked the Medicare enrollment and billing privileges of Petitioner, Tactile Systems Technology Inc., pursuant to 42 C.F.R. § 424.535(a)(5) because Petitioner was not operational at its practice address on file.  This decision affirms the revocation of Petitioner’s Medicare enrollment and billing privileges by Palmetto because Petitioner was not operational at its practice location on file with CMS.

I.    Background and Procedural History

Petitioner was enrolled in the Medicare program as a supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).  CMS Exhibit (Ex.) 1 at 4-5.  On October 7, 2021, Petitioner submitted a Form CMS-855A to notify CMS that it was changing its practice location address to 51 Sawyer Road, 4th Floor, Waltham, MA 02453 (Waltham address), effective October 1, 2021.  CMS Ex. 1 at 4-5.  On the application, Petitioner listed its hours of operation as Monday through Friday, 8:00 a.m. to 4:30 p.m., and indicated it was available to the public 40 hours each week.  CMS Ex. 1

Page 2

at 5.  Palmetto notified Petitioner by letter dated October 8, 2021 that its practice location address was successfully changed.  CMS Ex. 2 at 1.

In an initial determination dated March 1, 2022, Petitioner received notice that its Medicare billing privileges were revoked pursuant to 42 C.F.R. § 424.535(a)(5) effective October 22, 2021, and that it would be subject to a one-year reenrollment bar.  CMS Ex. 5.  The initial determination stated that “a site visit conducted on October 22, 2021, at 51 Sawyer Road, 4th Floor, Waltham, MA 02453 revealed a vacant facility.”  CMS Ex. 5 at 1.  Additional “site visits conducted on December 2, 2021 and December 21, 2021, revealed a locked facility with no evidence of business activity during the hours of operation disclosed to the [National Supplier Clearinghouse (NSC)].”  CMS Ex. 5 at 1.

Petitioner requested reconsideration and Palmetto issued an unfavorable reconsidered determination on March 29, 2022.  CMS Ex. 7.  Palmetto upheld the revocation under 42 C.F.R. § 424.535(a)(5), finding that Petitioner was not operational at its practice address on file.  CMS Ex. 7 at 3.  Palmetto explained that “the NSC was not able to verify compliance with the supplier standards and therefore determined that the facility was not operational at the location provided to the NSC to furnish Medicare covered items and services.”  CMS Ex. 7 at 3.

Petitioner timely requested a hearing before an administrative law judge (ALJ).  The case was assigned to me, and the Civil Remedies Division issued my Acknowledgment and Standing Prehearing Order dated May 27, 2022 (Prehearing Order).  The Prehearing Order directed each party to file a prehearing exchange consisting of a brief and any supporting documents.  Prehearing Order ¶ 6.  CMS filed a brief (CMS Br.), including a motion for summary judgment, and seven proposed exhibits (CMS Exs. 1-7).  Petitioner filed a cross‐motion for summary judgment (P. Br.).  Absent objection from Petitioner, CMS Exs. 1-7 are admitted into evidence.

Neither party submitted written direct testimony.  Therefore, no hearing is necessary, and this matter will be decided based upon the written record, without regard to whether the standards for summary judgment are met.  Prehearing Order ¶ 12; Civil Remedies Division Procedures ¶ 19(d).

II.    Jurisdiction

This tribunal has the authority to hear and decide this matter.  42 U.S.C. § 1395cc(j)(8); 42 C.F.R. §§ 424.545(a), 498.1(g), 498.3(b)(17), 498.5(*l*)(2).

III.    Issue

The issue to be decided is whether CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(5).

Page 3

IV.    Legal Authorities

The Secretary of Health and Human Services must issue a billing number for a DMEPOS supplier to receive Medicare payments for items furnished to a Medicare-eligible beneficiary.  Social Security Act § 1834(j)(1)(A) (42 U.S.C. § 1395m(j)(1)(A)).  To receive direct billing privileges, a DMEPOS supplier must meet and maintain compliance with the supplier enrollment standards set forth in 42 C.F.R. § 424.57(c).  Among other standards, a DMEPOS supplier must maintain a physical facility on an appropriate site, in a location that is accessible to the public and staffed during posted hours of operation, with a visible sign and posted hours of operation.  42 C.F.R. § 424.57(c)(7)(i).  The supplier must be open to the public a minimum of 30 hours per week.  42 C.F.R. § 424.57(c)(30)(i).  CMS will revoke a currently enrolled Medicare supplier’s billing privileges if CMS or its agent determines that the supplier is not in compliance with any supplier enrollment standard.  42 C.F.R. § 424.57(e).

CMS may revoke an enrolled supplier’s Medicare billing privileges and any corresponding supplier agreement for several reasons, including if, upon on-site review or other reliable evidence, CMS determines that the supplier is no longer operational to furnish Medicare-covered items or services or otherwise fails to satisfy any Medicare enrollment requirement.  42 C.F.R. § 424.535(a)(5).  If CMS revokes a supplier’s Medicare billing privileges because CMS or one of its contractors determined the supplier not to be operational, the revocation becomes effective on the date that CMS or its contractor determined the supplier to be nonoperational.  42 C.F.R. § 424.535(g).  After a supplier’s Medicare enrollment and billing privileges are revoked, the supplier is barred from reenrolling in the Medicare program for a minimum of one year, and up to 10 years, for a first-time revocation.  42 C.F.R. § 424.535(c)(1).

V.    Findings of Fact

Petitioner is a Minnesota based company specializing in at-home pneumatic compression devices to treat lymphedema and chronic venous insufficiency.  Frye Aff. at 3 (DAB E‐File Docket # 1c).  Petitioner has four accredited offices in Massachusetts, Michigan, North Carolina, and Alabama.  Frye Aff. at 3.

On October 22, 2021, at approximately 1:16 p.m., a site inspector from the NSC conducted an on-site visit at the Waltham address and found no signs of business activity.  CMS Ex. 3 at 1.  The inspector took photographs showing the space was unoccupied and under construction.  CMS Ex. 3 at 7-8.  Although there was a permanent, visible sign with Petitioner’s business name posted, no hours of operation were posted.  CMS Ex. 3 at 1, 2, 8.  According to the building manager, Petitioner was scheduled to move into the office space in mid-November 2021.  CMS Ex. 3 at 6.

Page 4

At approximately 1:53 p.m.1 on December 2, 2021, a site inspector from the NSC conducted a second on-site visit at the Waltham location.  CMS Ex. 4 at 1.  The same inspector returned for a third on-site visit on December 21, 2021, at approximately 10:46 a.m.  CMS Ex. 4 at 1.  The inspector reported that during both visits, the office was empty, the lights were off, the door was locked, and a “will return at 8:00” sign was posted on the window by the front door.  CMS Ex. 4 at 7.  A sign with Petitioner’s business hours and a phone number was also posted by the door.  CMS Ex. 4 at 14; P. Ex. 4.2  The inspector called the number and spoke with a customer service representative, who explained that to the best of her knowledge, Petitioner was based in Minnesota with call representatives across the country but did not have any offices.  CMS Ex. 4 at 7.  Attached to the survey form were photographs of the front door to Petitioner’s office space, showing the sign with the hours of operation and phone number, and the “will return” sign.  CMS Ex. 4 at 12, 14.

VI.    Analysis and Conclusions of Law3

***A. CMS had a legal basis to revoke******Petitioner’s Medicare enrollment and billing privileges pursuant to 42*** ***C.F.R. § 424.535(a)(5) because it was not operational at the practice location on file with CMS.***

CMS may revoke a currently enrolled supplier’s Medicare billing privileges when, upon on-site review or other reliable evidence, CMS determines that the supplier is no longer operational to furnish Medicare-covered items or services.  42 C.F.R. § 424.535(a)(5)(i).  A supplier is “operational” when it:

[H]as a qualified physical practice location, is open to the public for the purpose of providing health care related services, is prepared to submit valid Medicare claims, and is properly staffed, equipped, and stocked (as applicable based on the type of facility or organization, provider or supplier specialty, or the services or items being rendered) to furnish these items or services.

Page 5

42 C.F.R. § 424.502.  To be “operational” as defined in section 424.502, a supplier, among other things, “must have a ‘qualified physical practice location’ that is ‘open to the public for the purpose of providing health care related services.’”  *Viora Home Health, Inc.*, DAB No. 2690 at 7 (2016).  A supplier’s qualified physical practice location is the address that is on file with CMS at the time of a site visit.  *Care Pro Home Health, Inc.*, DAB No. 2723 at 5-6 (2016).  The proper inquiry is to assess a supplier’s operational status *at the time of the onsite review* because the intent of the applicable regulations “is that a [supplier] must maintain, and be able to demonstrate, continued compliance with the requirements for receiving Medicare billing privileges.”  *Viora*, DAB No. 2690 at 7 n.7 (emphasis in original) (*quoting A to Z DME, LLC*, DAB No. 2303 at 7 (2010)).

The address on file with CMS at the time of the three site visits was the Waltham address.  Petitioner indicated on its change of application form that the effective date for the Waltham location was October 1, 2021 and the NSC approved Petitioner’s application on October 8.  CMS Ex. 1 at 4-5; CMS Ex. 2 at 1.  Yet, Petitioner was not operational on three different occasions following the approval of its new practice address.

Petitioner’s location was unoccupied and under construction on October 22, 2021 due to delays caused by the coronavirus pandemic and supply chain issues.  CMS Ex. 3; Request for Hearing (RFH) at 9, 14-15.  Petitioner does not dispute it was not operational at the Waltham location on October 22, but claims it was operational on that date at its Boston location.  RFH at 10.  Petitioner also does not dispute that the inspectors unsuccessfully attempted to conduct site visits during posted business hours on December 2 and 21 at the Waltham location.  Yet Petitioner argues that it was operational on December 2 and 21 because it met all the requirements of 42 C.F.R. § 424.502.  P. Br. at 1-4.

Petitioner first asserts it had a physical practice location with signage on the first floor of the building and the front door of its office space.  P. Br. at 2.  Petitioner also states it was under a valid lease.  P. Br. at 2.  Although Petitioner had a physical practice location, it did not meet the other requirements of section 424.502 because the office was unstaffed and was not open and accessible to the public during the posted business hours on December 2 and 21.

Petitioner began operating at the Waltham location on November 22, 2021.  P. Br. at 4.  As Petitioner indicated in its change of information application, the sign posted next to the front door showed the business hours as Monday through Friday, 8:00 a.m. to 4:30 p.m.  CMS Ex. 1 at 5; CMS Ex. 4 at 12.  The inspector attempted site visits during business hours on December 2 at 1:53 p.m. and 10:46 a.m. on December 21.  CMS Ex. 4 at 1.  However, during both visits, the office was not staffed, the lights were off, and the door was locked.  CMS Ex. 4 at 7.  Additionally, a “will return” sign was posted on the window by the door further indicating the office was unstaffed.  CMS Ex. 4 at 7.  Being open and accessible to the public is a critical element of section 424.502.  In violation of

Page 6

the regulation, Petitioner’s facility was locked and unstaffed when the inspector attempted site reviews on two occasions during posted business hours.

Despite being closed and unstaffed, Petitioner argues that the facility was open to the public and properly staffed, equipped, and stocked on December 2 and 21.  P. Br. at 3, 4.  According to Petitioner,  CMS used the wrong standard to conclude that Petitioner was not operational because 42 C.F.R. § 424.502 does not define “open to the public,” does not require an office be staffed during the posted hours of operation, and does not require a supplier to be open to the public for a specific number of hours.  P. Br. at 3.  Petitioner notes that section 424.57(c)(7) specifically requires DMEPOS suppliers to be “accessible and staffed during posted hours of operation,” and claims that under the “operational” standard in section 424.502, a supplier “can be open to the public in the way the business operates.”  P. Br. at 3.

Petitioner explains that the Waltham location did not require staffing because the location was rarely used as a walk-in location and because it “almost exclusively operates in a manner most convenient and responsive to patients, meeting them during regular clinic visits and completing demonstrations and training in their home.”  P. Br. at 3.  Petitioner claims that although it faced staffing issues and front desk staff were not present on December 2 and 21, the sales manager and representatives were using the office.  RFH at 11, 12.  Petitioner maintains it was open to the public because beneficiaries could call the phone number posted on the door to receive customer service from Petitioner’s corporate office in Minnesota.  RFH at 11, 12.  Petitioner also asserts it could be open to the public for “pre-scheduled patient trainings, some product demonstrations, storage and medical devices, employee meetings, employee meetings and employee office spaces.”  RFH at 10-11.  Petitioner indicates that no patients requested appointments at the Waltham location between November 15 and January 1, 2022.  RFH at 11.

Petitioner notes that CMS revoked its billing privileges pursuant to 42 C.F.R. § 424.535(a)(5), not 42 C.F.R. § 424.57(c)(7).  Although CMS relied on evidence that would also be relevant to assessing compliance with 42 C.F.R. § 424.57(c)(7), the evidence demonstrates CMS had a basis to revoke Petitioner’s billing privileges because it was not operational under 42 C.F.R. § 424.535(a)(5).

Petitioner’s arguments that it was operating out of its Boston location on October 22 and that it “almost exclusively” provided services to beneficiaries at their clinic visits and in their homes are without merit.  The Departmental Appeals Board has rejected similar arguments of petitioners being operational under section 424.502 because they operated at a location other than the practice location on file.  *OC Housecalls, Inc.*, DAB No. 2893 at 4 (2018).  To satisfy the definition at 42 C.F.R. § 424.502, a supplier must be operational at its qualified physical practice location on file with CMS or CMS’s contractor at the time of the onsite review.  *Jason R. Bailey, M.D., P.A.*, DAB No. 2855 at 9 (2018); *Foot Specialists of Northridge*, DAB No. 2773 at 8-9 (2017) (citing

Page 7

*Care Pro*, DAB No. 2723at 5-6)).  There is no exception to this rule, even if the supplier provides care at a location other than its practice location on file.  *OC Housecalls*, DAB No. 2893at 10-11; s*ee also* *Care Pro*, DAB No. 2723 at 6; *Viora*, DAB No. 2690 at 12‐13; *Vamet Consulting & Medical Servs.*, DAB No. 2778 at 8-9 (2017).  It is no defense that a supplier may be operating elsewhere other than at its qualified physical practice location at the time of the onsite review because CMS intended site visits to be unscheduled and unannounced to ensure appropriate standards are being met.  *Care Pro*, DAB No. 2763at 6 n.4 (citing 76 Fed. Reg. 5862, 5870 (Feb. 2, 2011)).

The undisputed evidence establishes Petitioner was not operational at its Waltham location during posted business hours on the dates of the inspections.  Though Petitioner argues that the company was still operating at its Boston location on October 22, that does not negate the fact that Petitioner was not operational at its qualified physical practice location of record when CMS attempted to inspect the location.  Even excusing Petitioner for not being operational on October 22 due to construction delays, Petitioner was not operational on December 2 and 21.  Despite Petitioner’s claims that the sales manager and representatives were using the office, the office was locked, and the lights were off both times the inspector attempted to conduct a site visit.  Further, although Petitioner could provide services to beneficiaries elsewhere or utilize its office for appointments and pre-scheduled meetings, the regulation requires Petitioner to be open to the public and staffed at its practice location on file.  Similarly, posting a customer service phone number on the door does not constitute compliance with the requirement to be open to the public for the purpose of providing health care related services.  *Vamet*, DAB No. 2778 at 7.

Petitioner also argues it was operational because it was prepared to submit valid Medicare claims.  P. Br. at 4.  Petitioner acknowledges it did not have internet or phone services until November 29 but argues that the absence of internet access for two weeks does not mean that it was not prepared to submit valid Medicare claims.  RFH at 11; P. Br. at 4.  Regardless of whether Petitioner was prepared to submit valid Medicare claims, Petitioner’s office was not open to the public and not staffed on the dates of three different site visits, which is a sufficient legal basis for CMS to revoke Petitioner’s billing privileges.

Petitioner was not operational because the Waltham address, the practice location it provided to CMS, was not open to the public for the purpose of providing health care related services and was not staffed on the dates of the onsite reviews, October 22, December 2, and December 21.  Petitioner’s failure to be open to the public on any of the days that the inspector attempted site visits prevented the inspector from determining whether Petitioner was compliant with enrollment requirements.  Therefore, CMS had a legal basis to revoke Petitioner’s enrollment and billing privileges under 42 C.F.R. § 424.535(a)(5).

Page 8

***B. Petitioner’s request for me to recommend that CMS reopen the matter under 42 C.F.R. § 498.30 is denied.***

Petitioner requests that I recommend that CMS reopen the appeal under 42 C.F.R. § 498.30 if it is determined that Petitioner was operational on December 2 and 21.  P. Br. at 4.  Because CMS’s determination that Petitioner was not operational on December 2 and 21 is affirmed, Petitioner’s request is denied.  Moreover, the two cases Petitioner cites in support of its request, *Revolution Sport & Spine Therapy*, DAB CR4862 (2017) and *Integrated Homecare Servs. Chicago Corp.*, DAB CR3070 (2014), are not analogous to this case.

Petitioner argues that like the Waltham location, the construction of the petitioner’s new office location in *Revolution Sport*was delayed by unforeseen circumstances.  RFH at 14-15.  In *Revolution Sport*, the ALJ upheld CMS’s denial of the supplier’s enrollment application for failure to be operational at the practice location identified in the enrollment application at the time of an inspection.  DAB CR4862 at 6.  Despite affirming the enrollment denial, the ALJ urged CMS to reopen the matter and conduct another site visit because the petitioner’s chief executive officer met the inspector at the sole site visit and reported the construction of the new facility had been delayed.  *Revolution Sport,* DAB CR4862 at 6.  The ALJ explained there would have been no threat of fraudulent billing because the petitioner could not have billed Medicare until it started to provide services at the new facility.  *Revolution Sport,* DAB CR4862 at 6.  As the ALJ expressed, the purpose of unannounced on-site inspections is to prevent fraud, waste, and abuse in the Medicare program and ensure the DMEPOS supplier remains operational and viable.  *See* 76 Fed. Reg. 5862, 5869‐70 (Feb. 2, 2011).

Petitioner also points to *Integrated Homecare* where CMS reopened the case and issued a decision in favor of the petitioner based on the recommendation of the ALJ.  P. Br. at 6.  Petitioner contends that like the petitioner in *Integrated Homecare*, it should not be penalized for its diligence in submitting the change of application form.  P. Br. at 5-6.  Petitioner submitted a change of address form on October 7, 2021, with an effective date of October 1.  CMS Ex. 1.  Petitioner asserts that since it had 30 days from the date of the change of location to report the new address to CMS (42 C.F.R. § 424.57(c)(2)) and it continued to serve patients at the former location until November 19, it was not required to notify CMS of the new location until December 19.  P. Br. at 5.

In *Integrated Homecare*, the ALJ granted summary judgment for CMS, affirming the revocation of petitioner’s billing privileges for failure to be operational at the time of the onsite review due to construction delays.  DAB CR3070 at 7.  However, the ALJ noted the petitioner filed the change of address application based on the original construction schedule and when petitioner learned construction issues would delay the move to the new location, it did not notify CMS or NSC of the delayed office opening.  *Integrated Homecare*, DAB CR3070 at 2, 5, 9.  Even though the petitioner failed to notify CMS and

Page 9

NSC of the delays, the ALJ indicated the petitioner’s violation arose from trying to diligently ensure CMS and NSC were notified of the change in office address and recommended CMS reopen the appeal under section 498.30 to determine whether it should have revoked the petitioner’s billing privileges or a shorter reenrollment bar was warranted.  *Integrated Homecare*, DAB CR3070 at 9.

This case can be distinguished from *Revolution Sport* and *Integrated Homecare*.  In *Revolution Sport* and *Integrated Homecare*, CMS conducted only one site visit before denying Revolution Sport’s Medicare enrollment and revoking Integrated Homecare’s billing privileges.  CMS did not conduct additional site visits after finding that the petitioners’ locations were still under construction and determining the petitioners were not operational.  Here, NSC inspectors conducted two additional site visits in December, after the move-in date the building manager conveyed to the inspector who attempted the October 22 site visit, and after the date Petitioner stated it began operating at the Waltham location.  As discussed above, Petitioner was still not operational on the December 2 and 21 site visits because the office door was locked, the office was not staffed, and there were no signs of business activity.  Therefore, there is no basis to recommend that CMS reopen the appeal for the October 22 site visit.

VII.    Conclusion

Based on the evidence set forth, CMS has established a legal basis for the revocation of Petitioner’s Medicare enrollment and billing privileges.  Therefore, the revocation of Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(5) is affirmed.

Endnotes

1 The first page of the inspector’s report indicates the attempted inspection occurred at 1:53 p.m.  CMS Ex. 4 at 1.  However, the timestamp on the accompanying photographs shows the photographs were taken between 2:53 p.m. and 2:57 p.m.  CMS Ex. 4 at 8-12.

2 Petitioner submitted four exhibits with its request for hearing.

3 My conclusions of law are set forth in bold and italicized headings and followed by pertinent findings of fact and analysis.
  
          /s/
        Tannisha D. Bell

                      Administrative Law Judge Back to top
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