Opinion ID: 3003795
Heading Depth: 2
Heading Rank: 1

Heading: The Medicaid Reimbursement Process

Text: Hospitals that participate in the Medicare program must enter into a provider agreement with the U.S. Department of Health and Human Services to receive Medicare reimbursement. Those hospitals participating in the Medicare program that serve a disproportionate share of low income patients are entitled to a Disproportionate Share Hospital (DSH) payment adjustment. The DSH payment adjustment requires the calculation of the disproportionate patient percentage. The disproportionate patient percentage is the sum of the Medicaid Fraction 1 1 The Medicaid Fraction is the number of hospital patient days for patients eligible for medical assistance under a State Medicaid plan but who are not entitled to Medicare Part I, divided by the total number of hospital patient days. 42 U.S.C. § 1395ww(d)(5)(F)(vi)(II). No. 09-1665 3 and the Supplemental Security Income (SSI) Fraction.2 See 42 U.S.C. § 1395ww(d)(5)(F)(vi). When filing for reimbursement from the Medicare program, the provider must first file an annual cost report with an assigned Intermediary. The Intermediary then conducts an audit, accounts for interim payments to the provider, and issues an initial “notice of program reimbursement” (NPR). The provider may appeal the initial NPR to the PRRB within 180 days if at least $10,000 is at issue. 42 U.S.C. § 1395oo(a). Upon appeal, the Secretary’s delegate, the Administrator of the Centers for Medicare and Medicaid Services (CMS), may review the decision of the PRRB. If the provider is dissatisfied with the decision of the PRRB and the CMS Administrator, the provider may request that a federal district court review the decision. 42 U.S.C. § 1395oo(f)(1). When a provider does not file a timely appeal of the initial NPR, the NPR is considered finalized. 42 C.F.R. § 405.1807 (2009). However, under 42 C.F.R. § 405.1885(a) (2004)3 —a set of regulations separate from those governing 2 The SSI Fraction is the number of hospital patient days for patients entitled to benefits under both Medicare Part A and the SSI program divided by the total number of hospital patient days for patients entitled to Medicare Part A. 42 U.S.C. § 1395ww(d)(5)(F)(vi)(I). 3 In 2008 the Secretary substantively amended 42 C.F.R. § 405.1885. This amendment resulted in a significant change to the appeals rights of a provider after a reopening. Therefore, (continued...) 4 No. 09-1665 the appeals process discussed above—the Intermediary may reopen specific findings on matters at issue within three years of the initial NPR based on a request by the provider or on its own initiative. At the close of the reopening, the Intermediary issues a revised NPR on the specific issues reopened. The parts of the NPR that the Intermediary did not reopen remain finalized in the initial NPR. With regards to the specific issues reopened, the provider has the rights of appeal discussed above. 42 C.F.R. § 405.1889 (2009). B. The Medicaid Reimbursement Process In This Case Little Company is a hospital that participates in the Medicare program and is entitled to a DSH payment adjustment. On September 12, 2000, Little Company’s assigned Intermediary issued an initial NPR for Little Company’s cost reporting period ending June 20, 1998. The NPR was finalized when Little Company failed to appeal to the PRRB or the CMS Administrator within 180 days. On September 5, 2003, Little Company submitted a request for reopening of the finalized 1998 NPR regarding the calculation of the Medicaid Fraction and the SSI Fraction. Shortly after this request, on November 3, 3 (...continued) throughout this opinion all citations to 42 C.F.R. § 405.1885 reference the regulation as it was in 2004, the year relevant to this case. All other references to the C.F.R. are to the current version, which has remained substantively unchanged since 2004. No. 09-1665 5 2003, an email exchange occurred between two em- ployees of the Intermediary regarding Little Company’s 1998 cost report. The email stated, “Chris, I just realized that there are only Primary, Secondary and HMO supports. Can you please send supports for the SSI Eligible Days as well? Thank you, Mark K.” Almost exactly a year after this email exchange, on November 11, 2004, the Intermediary issued a Notice of Reopening. The Notice of Reopening stated: In accordance with this Regulation, we have determined that your cost report will be reopened for the following reason(s): The Intermediary notes that the Provider has requested a reopening to include Medicaid Additional Eligible Days (757) and Baby Additional Days (82) for the DSH computation. The Notice of Reopening made no mention of reopening the SSI Fraction and the Intermediary did not issue a separate Notice of Reopening regarding the SSI Fraction. On November 17, 2004, the Intermediary issued a revised NPR with an adjusted Medicaid Fraction. On January 26, 2005, Little Company appealed the revised NPR to the PRRB. Specifically, Little Company appealed the revised Medicaid Fraction and the failure to revise the SSI Fraction. On March 3, 2005, the Intermediary filed a jurisdictional challenge to Little Company’s appeal of the failure to adjust the SSI Fraction. The Intermediary claimed the SSI Fraction was not reopened and therefore remained finalized from the NPR issued in 2000. On February 15, 2006, the PRRB sustained the Intermediary’s challenge to Little Company’s appeal of the SSI Fraction and dismissed the issue. 6 No. 09-1665 On November 27, 2006, Little Company filed suit in the Northern District of Illinois challenging the PRRB’s jurisdictional decision. On October 18, 2007, Little Company filed a motion to permit discovery of decisions by the PRRB and CMS Administrator in similar administrative appeals. The district court denied this discovery motion, finding that judicial review of the PRRB’s final decision on Little Company’s appeal should be based solely on the certified administrative record. Both parties filed for summary judgment. The district court granted summary judgment in favor of the Secretary. The district court found that the evidence in the record supported the PRRB’s finding that the Intermediary did not reopen the SSI Fraction, and therefore, the PRRB properly dismissed that issue. On appeal, Little Company challenges the district court’s grant of summary judgment in favor of the Secretary and the district court’s denial of the motion for discovery outside of the administrative record.