Opinion ID: 3023610
Heading Depth: 3
Heading Rank: 2

Heading: Decision of the Secretary

Text: The parties sought review of the PRRB decision by the Acting Deputy Administrator (“Administrator”) of the CMS, who granted review and partially reversed by reinstating the successor intermediary’s adjustments to fiscal years 1995-1996.6 The Administrator concluded that the first alternative allocation method used in 1995-1996 was similar to and based on the same rationale as the second alternative allocation method that the PRRB examined and disapproved for use in 1997-1999. Upon a review of the entire record, the Administrator determined that MHH “failed to demonstrate that the prior approved methodology for allocating [1995-1996] home office costs is, in fact, a more accurate and sophisticated method.” App. at 29. Notably, the Administrator rejected MHH’s reliance argument: The Administrator does not agree that the methodology for the FYs 1995 and 1996 can be allowed only on the basis that it was approved by the prior intermediary. This basis for such an allowance ignores the dictates of the Medicare program set forth in § 1861(v)(1)(A) of the Act and elevates the PRM prior approval provisions above the requirements of the statute. A general principle under Medicare set forth at § 1861(v)(1)(A) of the Act is that to be reimbursable, the cost must be related to patient care and that Medicare shall not pay for costs incurred by non-Medicare beneficiaries, and vice-versa, that is, Medicare prohibits cross-subsidization of costs. Moreover, the documentation requirements of the statute and the regulation places the burden of demonstrating that costs are to be paid by Medicare on the provider. App. at 28-29. The Administrator reiterated that “regardless of the prior approval (which is subject to audit),” the successor intermediary properly disallowed MHH’s cost allocation methodology because MHH “failed to articulate a valid rationale” supporting its methodology. App. at 29. Above all, the Administrator stressed that 6 The Deputy Administrator signed the Secretary’s final decision, but we will refer to the “Administrator” as having made the decision. 9 prior approval, or the lack thereof, cannot negate “the Medicare cost principle prohibiting cost shifting.” App. at 29.