Provider Reimbursement Review Board Issues First Favorable Jurisdictional Decision Following May 2014 Alert 10 Announcement

On March 19, 2015, the Provider Reimbursement Review Board (Board) issued a decision in which it accepted jurisdiction over an appeal in which an Ohio hospital sought to add to its Medicare DSH calculation inpatient days that were not identified as Medicaid-eligible on its as-filed cost reports.  In May 2014, the Board issued Alert 10 which required hospitals to provide evidence of a specific impediment that prevented them from identifying and verifying Medicaid eligible days on their as-filed cost reports, thereby raising the threshold showing that hospitals must make in order to establish jurisdiction in such appeals.  In an opinion that clarifies Alert 10, the Board determined that Barberton Citizens Hospital (Barberton) had met the new threshold and accepted jurisdiction over the hospital’s 2004 and 2005 cost report appeals.  Barberton was represented by King & Spalding in this matter. 

In Barberton, the Medicare Administrative Contractor (MAC) challenged the Board’s jurisdiction over Barberton’s Medicaid eligible days appeal, contending that Barberton failed to meet the standards of Alert 10.  Specifically, the MAC argued that, although the hospital had cited a number of reasons as to why it might not have been able to verify Medicaid eligibility for the additional days it sought to add, the hospital had failed to establish that it had an adequate process for identifying and verifying Medicaid days prior to filing its cost report.  The MAC also argued that Barberton had failed to explain why each reason or impediment prevented it from identifying each additional Medicaid eligible day it sought to add to the cost report. 

The Board disagreed with the MAC on both points.  Regarding the practical impediment requirement, the Board determined that Barberton met its burden of proof and “identified multiple impediments that made it impossible for it to verify and/or obtain reliable Medicaid eligibility data from the Ohio State Medicaid program on the Medicaid eligible days at issue in advance of its cost report filing deadline,” including the following:    

• Retroactive Medicaid eligibility determinations made it “impossible for the State to identify these eligible days prior to the cost report filing deadline”;

• Between 2004 and 2007, the Ohio State Medicaid program eligibility database systems had a large gap in its historical records that prevented verification of Medicaid eligibility in some cases;
• There were “limitations in accessing the Ohio State database,” including the continuous updating of “data elements such as names and Social Security numbers” to corrects errors and “missing elements” such as middle names, all of which delayed Medicaid eligibility verification, such that it could take up to a year after cost report filing for “95 to 98 percent of the eligibles [to be] determined”; and
• There were several other errors with the Ohio Historical Database that were not reconciled until 2007 or later, including the State’s policy on purging eligibility records due to patient death or space limitations, the State’s policy on multiple record sets where conflicting records were set aside and other corrupted records were eliminated (rather than corrected) because their accuracy could not be verified.

Relying upon this information, the Board held that the MAC’s argument that a provider must assign a specific impediment to each additional claimed day was invalid, as Ohio Medicaid “does not provide public access to the type of information that is necessary to attribute specific impediments to specific Medicaid eligible days.” 

With respect to Barberton’s process for identifying additional Medicaid eligible days, the Board determined that Barberton “used all available and practical means to identify, accumulate, and verify with the State the actual Medicaid eligible days that were reported on its Medicare cost reports.”   

The Board’s decision in Barberton offers hospitals clarification on the requirements of Board Alert 10, which established the practical impediment requirement for providers with pending Medicaid eligible days appeals.  The Barberton decision suggests that hospitals must at least show that they used “all available practical means” to identify and verify Medicaid eligible days including an attempt to “verify eligibility with [the state’s] verification systems,” but a hospital need not show that it “has exhausted all possible verification methods to ascertain Medicaid eligibility, including hiring a consultant.”  The Board also seems to have retreated from the Alert 10 requirement that the provider show, by category, how the practical impediment prevented the provider from verifying eligibility for that category of days.  The Barberton decision recognized that Ohio’s systems did not return the information necessary to provide a day-by-day explanation as to why eligibility could not be verified.  In all likelihood, no state’s system provides such information.

Finally, it is significant that the Board recognized that limitations in a state’s eligibility verification system and other shortcomings could constitute a “practical impediment.”  The Board relied upon evidence of known gaps in the historical database, policy decisions on the part of the State to purge stale records or fields of data to save file space, thereby taking off-line potentially matching eligibility records, and other such known errors in the State’s records.  Given that CMS has never established a federal standard for how States must maintain their databases for eligibility verification, it is almost certainly the case that these types of limitations and errors are not limited to the State of Ohio. 

Mark Polston of King & Spalding’s Washington, D.C. office, and Juliet McBride of the Houston office, represented Barberton in the hearing before the Board.  The CMS Administrator has sixty days to review the decision.

Reporter, Paige Fillingame, Houston, +1 713 615 7632, pfillingame@kslaw.com.