[Federal Register Volume 69, Number 122 (Friday, June 25, 2004)]
[Proposed Rules]
[Pages 35716-35766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13246]



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Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 405, 413, and 417



Medicare Program; Provider Reimbursement Determinations and Appeals; 
Proposed Rule

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

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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.

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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.

[[Page 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 Sec.  405.1801(a). Under 
Sec. Sec.  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 Sec.  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 Sec.  413.30); a denial of a PPS hospital's 
request to be classified as a sole community hospital (see Sec.  
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 Sec.  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 Sec.  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 Sec.  405.1835 
and Sec.  405.1841. Alternatively, the provider may request a Board 
hearing with one or more additional providers under section 1878(b) of 
the Act and Sec.  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 Sec.  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 Sec.  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

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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 (Sec.  
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 Sec.  
405.1801(a) by reference to Sec.  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 Sec.  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 Sec.  
405.1817.'' The other two terms would be defined by reference to 
proposed Sec.  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 
Sec.  405.1834.'' In turn, ``CMS reviewing official procedure'' would 
mean ``the review provided for in Sec.  405.1834.''
2. Administrator Review
    We propose to revise the term ``Administrator's review'' in Sec.  
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 
non-possessive terms ``Board hearing,'' ``intermediary hearing,'' and 
``CMS reviewing official procedure.''
3. Reviewing Entity
    We propose to add the term ``reviewing entity'' to Sec.  
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 Sec. Sec.  
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 Sec.  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 Sec.  
405.1834 (see section II.G. below), we propose to amend Sec.  
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 Sec.  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 (Sec. Sec.  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 Sec.  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 
Sec.  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 Sec.  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

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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 Sec.  
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 Sec.  405.1811(a)(3) would 
specify the time to request an intermediary hearing; proposed Sec.  
405.1834(c) would explain the time to request review by a CMS reviewing 
official of an intermediary hearing officer decision; proposed Sec.  
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 Sec.  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 Sec.  405.1801, and we propose to add a new paragraph 
(d) to Sec.  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 Sec.  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 Sec.  
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 Sec.  405.722), and for 
reconsideration and appeal of determinations affecting participation in 
the Medicare program (see Sec.  498.22(b)(3) and Sec.  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 Sec.  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

[[Page 35720]]

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 Sec.  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 Sec.  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 (Sec.  405.1801(b))

1. Providers
    Current Sec.  405.1801(b)(1) states that the term ``provider'' 
includes, for purposes of subpart R, hospitals paid under the PPS. 
However, neither

[[Page 35721]]

Sec.  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 Sec.  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 Sec.  
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 Sec.  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 [non-provider] entities to the maximum extent possible'' where 
the amount of program reimbursement in controversy is at least $1,000.
    We believe Sec.  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 Sec.  405.1801(b)(2) to state that non-provider entities may not 
obtain an intermediary hearing or a Board hearing.
    We believe Sec.  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 Sec.  405.1843) 
but not intermediary hearings (see Sec.  405.1815). Accordingly, we 
propose to revise Sec.  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 Sec.  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. Sec.  
553(b)(3)(A).

D. Provider Hearing Rights (Sec.  405.1803(d), Sec.  405.1811, and 
Sec.  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 Sec. Sec.  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 
Sec.  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 Sec.  405.1839 in section II. I. 
of this preamble.
1. Provider Dissatisfaction With Medicare Reimbursement; Revised Self-
Disallowance 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 Sec.  405.1801(a)(1) through 
(a)(3) and Sec.  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 Sec. Sec.  
405.1811(b) and Sec.  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 self-
disallowance 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

[[Page 35722]]

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, Sec.  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 self-disallowance policy in a revised Sec.  
405.1811(a)(1) and Sec.  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 self-disallow an item, the provider would be required to follow the 
applicable procedures for filing a cost report under protest, which are 
contained currently in Sec.  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 Sec.  
405.1811(a)(1)(i) and Sec.  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 good-faith 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 self-disallowed 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 self-disallowed 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, non-appealable 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 self-disallowed 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 Sec.  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 Sec.  405.1803(d) would further provide that CMS's 
authority to require audits of self-disallowed 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 (Sec. Sec.  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 Sec.  405.1835(a)(2) and Sec.  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 Sec.  405.1835(c) and Sec.  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 Sec.  
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 Sec.  
405.1841(a)(1) is the date the NPR is mailed to the provider. But under 
Sec.  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

[[Page 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 
Sec.  405.1875 and Sec.  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 Sec.  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 Sec.  
405.1811(a)(1) and Sec.  405.1841(a)(1), the ending date is the date of 
filing with the intermediary or Board, respectively, which is 
determined under Sec.  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 Sec.  405.1811(a) and (b) (for an intermediary hearing) and 
Sec.  405.1835(a)(2) and Sec.  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 
Sec.  405.1814 (``Intermediary hearing officer jurisdiction'') and 
Sec.  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 Sec.  405.1811(b)(1) and Sec.  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 Sec.  405.1814 and Sec.  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 self-disallowance 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 Sec.  
405.1811(b)(2) and Sec.  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 Sec.  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 Sec.  405.1885 and Sec.  405.1889). Because 
appropriate findings of fact and conclusions of law about Board 
jurisdiction (see proposed Sec.  405.1840) cannot be reached without 
this information, proposed Sec.  405.1811(b)(3) and Sec.  
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 Sec.  405.1811 and Sec.  405.1835. 
However, the hearing request would no longer need to include documents 
necessary to

[[Page 35724]]

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 
Sec.  405.1814 and proposed Sec.  405.1840).
5. Adding Issues to Original Hearing Request (Sec.  405.1811(c) and 
Sec.  405.1835(c))
    Under current Sec.  405.1811(c) and Sec.  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 Sec.  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 Sec.  405.1885 and Sec.  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 Sec.  
405.1811(a)(3) and Sec.  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 Sec.  413.24(f)(2)), 
after which the intermediary has 12 months to issue a timely NPR (see 
Sec.  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 Sec.  405.1869 (``Scope of Board's decisionmaking 
authority''), instead of Sec.  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 Sec.  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 Sec.  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 Sec.  405.1811(c) 
and Sec.  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 Sec.  405.1885(c)(1)). Any

[[Page 35725]]

request to add issues would have to be in writing, satisfy the 
jurisdictional dissatisfaction requirements under proposed Sec.  
405.1811 (a)(1) or Sec.  405.1835(a)(1), and meet the requirements 
governing the contents of a hearing request under proposed of Sec.  
405.1811(b) or Sec.  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 Sec.  405.1811(a)(2) or Sec.  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 (Sec.  405.1813 and Sec.  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 Sec.  405.1813 and Sec.  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 Sec.  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 Sec.  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 Sec.  405.1885(b).
    For the foregoing reasons, we propose to revise Sec.  405.1813 and 
add a new Sec.  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 Sec.  405.1813 and Sec.  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 
Sec.  405.1813 and Sec.  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 Sec.  405.1811(a)(3) 
or Sec.  405.1835(a)(3), as applicable.
    Second, while the current regulations do not include specific 
guidance for

[[Page 35726]]

determining whether there is good cause for granting an extension 
request, we propose to add criteria for this purpose. Proposed Sec.  
405.1813(b) and Sec.  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, 
Sec.  405.1813(c)(1) and Sec.  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 Sec.  405.1877(a)(3) or (a)(4).
    In order to facilitate any further administrative review of such a 
decision, proposed Sec.  405.1813(d) and Sec.  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, Sec.  405.1813(e) and Sec.  405.1836(e) includes proposals 
about the availability and timing of any review of such decisions. 
Specifically, Sec.  405.1813(e) and Sec.  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 Sec. Sec.  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 Sec.  405.1875(a)(2) or Sec.  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 Sec.  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 Sec.  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 (Sec.  405.1814)

    We propose to add a new Sec.  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 Sec.  405.1814 would be similar to proposed Sec.  405.1840, 
pertaining to Board jurisdiction, discussed below.
    In proposed Sec.  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 Sec.  405.1829; permitting discovery (see Sec.  405.1821); and 
conducting a hearing (see Sec.  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 Sec.  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 Sec.  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 Sec.  
405.1804.

G. CMS Reviewing Official Procedure (Sec.  405.1834)

    Currently, our procedures for CMS review of intermediary hearings 
appear at Sec.  2917 of the PRM. The procedures at Sec.  2917 of the 
PRM were issued in response to the court's decision in St. Louis 
University v. Blue Cross Hospital

[[Page 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 Sec.  405.1834 for that purpose.
    In Sec.  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 Sec.  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 Sec.  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. Non-final actions 
taken by the intermediary hearing officer generally would not be 
immediately reviewable. For example, and in accordance with proposed 
Sec.  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 Sec.  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 Sec.  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 
Sec.  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 Sec.  405.1834(f) would state the effect of a decision or 
a remand. Consistent with current procedures in section 2917 of the 
PRM, Sec.  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 (Sec.  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 Sec.  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

[[Page 35728]]

1878(a) of the Act and Sec.  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 Sec.  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 
Sec.  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 Sec.  405.1837 to 
conform the group appeal regulations to our proposed changes to the 
single provider appeal provisions of Sec.  405.1835.
    Another reason to propose revisions to Sec.  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 Sec.  405.1837 to reflect and 
update such longstanding policies for group appeals.
    Under our proposal, Sec.  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 Sec.  405.1839 
in section II. I., for this preamble.)
    Proposed Sec.  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 Sec.  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 Sec.  405.1835(a)(3).
    In proposed Sec.  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 Sec.  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 Sec.  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 Sec.  405.1837(b)(1) would require, 
consistent with section 1878(f)(1) of the Act and current Sec.  
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 Sec.  
405.1837(b)(2) would provide, consistent with section 1878(b) of the 
Act and current Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  405.1837(c), which would 
specify the requirements for the contents of a request for a group 
appeal. Under proposed Sec.  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 Sec.  405.1837(a). Proposed Sec.  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 Sec.  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 Sec.  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 Sec.  
405.1837(c)(4) would give the group an election between establishing at 
the outset that all hearing requirements (for each

[[Page 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 Sec.  
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 Sec.  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 Sec.  405.1837(d) to make jurisdictional findings in 
accordance with new proposed Sec.  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 Sec.  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 Sec.  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 Sec.  405.1837(e).
    Under proposed Sec.  405.1837(e)(2), the Board would not make the 
jurisdictional findings required under new proposed Sec.  405.1840 
until the group notifies the Board in writing that the group appeal is 
jurisdictionally complete. Proposed Sec.  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, Sec.  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 Sec.  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 Sec.  
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 Sec.  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 Sec.  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 Sec.  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 (Sec.  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 Sec.  405.1839. For both 
individual and group appeals, we would specify in proposed Sec.  
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 Sec.  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 Sec.  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 (Sec.  405.1840)

    We propose to add a new Sec.  405.1840, which would be similar to 
proposed new Sec.  405.1814, pertaining to intermediary hearing officer 
jurisdiction, as discussed at section II.F. of this preamble. In 
addition, we note that current Sec.  405.1873 provides that the Board 
decides questions relating to its

[[Page 35730]]

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 Sec.  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 
Sec.  405.1873 and consolidate its provisions into new Sec.  405.1840.

K. Expediting Judicial Review (Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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.

[[Page 35731]]

    In Sec.  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 Sec.  405.1842(d) we would specify the procedures for 
provider requests for EJR, including the required contents of such 
requests.
    In proposed Sec.  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 Sec.  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 Sec.  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 Sec.  
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 (Sec.  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 Sec.  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 Sec.  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 Sec.  405.1842(c), or in which it notified 
the provider that its request for EJR was complete under Sec.  
405.1842(e). Under proposed Sec.  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 Sec.  
405.1842(e).
    In proposed Sec.  405.1842(g)(1), we would provide that, in 
accordance with proposed Sec.  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 
Sec.  405.1875(a)(2) and (e), may be reopened in accordance with 
Sec. Sec.  405.1885 through 405.1889. Under proposed Sec.  
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 Sec.  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 Sec.  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

[[Page 35732]]

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 Sec.  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 Sec.  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 (Sec.  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 Sec.  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 Sec.  
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 Sec.  
405.1843(d)) would permit CMS to make written and timely filed amicus 
curiae submissions for the Board's consideration.

M. Quorum Requirements (Sec.  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 Sec.  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 time-
consuming 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 (Sec.  405.1853 and Sec.  
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 Sec.  405.1853. Proposed 
Sec.  405.1853(a) would specify the present requirement that, prior to 
any Board hearing, the intermediary and provider must attempt

[[Page 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 Sec.  405.1853(b), we would address the timeframes for 
submitting position papers. Currently, Sec.  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 Sec.  
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 Sec.  
405.1840(a)). All accompanying exhibits must be submitted in a form to 
be decided by the Board. Finally, proposed Sec.  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 Sec.  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 Sec.  
1005.6(b). Proposed Sec.  405.1853(e) would make changes in discovery 
procedures for Board proceedings, and we would propose similar changes 
to Sec.  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 Sec.  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 Sec.  405.1853(e)(1), and proposed Sec.  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 Sec.  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 Sec.  
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 Sec.  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.

[[Page 35734]]

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 Sec.  405.1821(a) would be similar for proceedings before an 
intermediary hearing officer(s).
    In Sec.  405.1853(e)(4) and Sec.  405.1821(c), we propose to 
specify the rights of non-parties 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 Sec.  405.1853(e)(5) and Sec.  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 
non-party. 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 Sec.  405.1853(e)(6), and in Sec.  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 Sec.  405.1875(a)(2), or of judicial review of a 
final agency decision as described in Sec.  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 Sec. Sec.  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 
non-party 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 (Sec.  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 Sec.  405.1853 in several respects.
    In proposed Sec.  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 non-parties, we propose to specifically 
state in Sec.  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 Sec.  405.1857 to clarify that a non-
party 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 Sec.  405.1857(c)(3), and by allowing it to seek immediate 
Administrator review of a Board subpoena in some circumstances, (see 
proposed Sec.  405.1857(d)(2)).
    In proposed Sec.  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

[[Page 35735]]

for Administrator review of Board discovery rulings.
    In proposed Sec.  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 (Sec.  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 Sec.  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 Sec.  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, Sec.  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 Sec.  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 (Sec.  
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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 
Sec.  405.1835(e).

R. Scope of Board's Authority in a Hearing Decision Sec.  405.1869)

    Section 1878(d) of the Act and Sec.  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 Sec.  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 Sec.  405.1840(b)) or which was not timely raised in 
the provider's hearing request.

[[Page 35736]]

We would also revise the title of Sec.  405.1869 slightly.

S. Board Hearing Decision (Sec.  405.1871)

    We propose to revise current Sec.  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 Sec.  
405.1840 (Board jurisdiction) and Sec.  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 Sec.  
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 Sec.  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 Sec.  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 non-binding. However, consistent with proposed changes to 
Sec. Sec.  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 (Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  
405.1871); Board Dismissal Decision (see Sec. Sec.  405.1836(e)(1) and 
(e)(2), Sec.  405.1840(c)(2), Sec. Sec.  405.1868(d)(1) and (2)); and 
Board Expedited Judicial Review Decision (see Sec. Sec.  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.

[[Page 35737]]

    Proposed Sec.  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 well-established 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 Sec.  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 Sec.  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 Sec.  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 Sec.  
405.1855 and proposed Sec.  405.1865(b)).
    We would revise the procedures for Administrator review in current 
Sec.  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 Sec.  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 Sec.  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 Sec.  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

[[Page 35738]]

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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  
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 Sec.  405.1875(a)(2)) is final and binding 
on each party to the appeal, and we would cross-reference Sec.  
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 Sec.  405.1803(d). We would also 
specify that an Administrator decision may be reopened by the 
Administrator in accordance with our regulations on reopening (Sec.  
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 Sec.  405.1803(d).
    Finally, in proposed Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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

[[Page 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 (Sec.  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 
Sec.  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 Sec.  
405.1875, to specify that a Board decision is final if it is one of the 
decisions specified in proposed Sec.  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 Sec.  
405.1875(a)(2)(i) through (iv) are: Board Hearing Decision (see Sec.  
405.1871); Board Dismissal Decision (see Sec.  405.1836(e)(1) and (2), 
Sec.  405.1840(c)(2) and (3), Sec.  405.1868(d)(1) and (2)); Board 
Expedited Judicial Review Decision (see Sec.  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 Sec.  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 Sec.  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 Sec.  405.1804 and proposed Sec.  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 Sec.  
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 Sec.  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 Sec.  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

[[Page 35740]]

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 (Sec. Sec.  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 (Sec.  405.1885)
    We propose to revise and make several changes to Sec.  405.1885. In 
proposed Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  405.1887 concerning the 
effects a notice of reopening and a notice after reopening

[[Page 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 Sec.  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 Sec.  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 CMS-
directed 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 Sec.  
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 Sec.  
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 non-appealable 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 Sec.  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 
(Sec.  405.1887)
    In proposed Sec.  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 Sec.  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 Sec.  
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

[[Page 35742]]

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 Sec.  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 (Sec.  405.1889)
    We propose to change the title of Sec.  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 Sec.  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 Sec.  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 rate-of-
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

[[Page 35743]]

an intermediary hearing under the above circumstances is also extended 
for good cause. We also propose to delete the references to Sec.  
405.1841 (which we propose to delete) in these sections and replace 
them with references to proposed new Sec.  405.1836.
2. Section 413.64(j)(1)
    We propose to make minor, non-substantive wording changes and to 
replace the reference to Sec.  405.1841 with a reference to Sec.  
405.1835.
3. Sections 417.576, 417.810
    As we explain above, we propose to revise Sec.  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 
Sec.  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 
Sec. Sec.  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 Sec.  
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

[[Page 35744]]

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:


Sec.  405.1801  Introduction.

    (a) Definitions. * * *
* * * * *
    CMS reviewing official means the reviewing official provided for in 
Sec.  405.1834.
    CMS reviewing official procedure means the review provided for in 
Sec.  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

[[Page 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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  405.1835(b))'' and add in its place ``(see 
Sec.  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:


Sec.  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 Sec.  
405.1833) or the Board (see Sec.  405.1871(b)).
    (ii) A final decision by a CMS reviewing official (see Sec.  
405.1834(f)(1)) or the Administrator (see Sec.  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 Sec.  405.1842 and 
Sec.  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 Sec.  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:


Sec.  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

[[Page 35746]]

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 
Sec.  405.1839) is at least $1,000 but less than $10,000; and
    (3) Unless the provider qualifies for a good cause extension under 
Sec.  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 Sec.  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 Sec.  
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 self-disallowed 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:


Sec.  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 
Sec.  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 Sec.  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 Sec.  405.1834(b)(2)(i) or reopened by the intermediary 
hearing officer(s) in accordance with Sec.  405.1885 through Sec.  
405.1889. The intermediary hearing officer(s) will promptly mail the 
decision to CMS' Office Hearings (see Sec.  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 Sec.  
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 Sec.  
405.1834(b)(2)(i) and (ii)).
    6. A new section 405.1814 is added to read as follows:


Sec.  405.1814  Intermediary hearing officer jurisdiction.

    (a) General rules. (1) After a request for an intermediary hearing 
is filed under Sec.  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,

[[Page 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 Sec.  405.1829);
    (B) Permitting discovery (see Sec.  405.1821); or conducting a 
hearing (see Sec.  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 Sec.  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 
Sec.  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 Sec.  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 Sec.  405.1804.
    (3) Any self-disallowed item except as permitted in Sec.  
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 Sec.  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 Sec.  405.1815) and to CMS' 
Office of Hearings (see Sec.  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 Sec.  405.1834 or reopened by the 
intermediary hearing officer(s) in accordance with Sec. Sec.  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 Sec.  405.1834(b)(3)). A CMS reviewing 
official may review under Sec.  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 Sec.  405.1831) by the 
intermediary hearing officer(s).
    7. Section 405.1815 is revised to read as follows:


Sec.  405.1815  Parties to proceedings before the intermediary hearing 
officer(s).

    When a provider files a request for an intermediary hearing in 
accordance with Sec.  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 Sec.  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:


Sec.  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 Sec.  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.

[[Page 35748]]

    (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 Sec.  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 
self-sworn 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 Sec.  405.1834(b)(3)). A discovery ruling may be examined 
solely during the course of CMS review under Sec.  405.1834 of a 
jurisdictional dismissal decision (see Sec.  405.1814(c)(2)) or a 
hearing decision (see Sec.  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 Sec.  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:


Sec.  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 Sec.  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:


Sec.  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 Sec.  
405.1811, and the legal authority to fully resolve the matters in a 
hearing decision (see Sec.  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 Sec.  
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

[[Page 35749]]

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 Sec.  405.1811 and Sec.  405.1814; and
    (ii) The specific matter was timely raised in an initial request 
for an intermediary hearing filed in accordance with Sec.  405.1811(b) 
or in a timely request to add issues to an appeal submitted in 
accordance with Sec.  405.1811(c).
    11. Section 405.1831 is revised to read as follows:


Sec.  405.1831  Intermediary hearing decision.

    (a) If the intermediary hearing officer(s) finds jurisdiction and 
conducts a hearing (see Sec.  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 Sec.  405.1823) and other evidence 
as may be included in the record (see Sec.  405.1827).
    (c) The decision must include findings of fact and conclusions of 
law on jurisdictional issues (see Sec.  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 Sec.  405.1834(b)(4)).
    12. Section 405.1833 is revised to read as follows:


Sec.  405.1833  Effect of intermediary hearing decision.

    An intermediary hearing decision issued in accordance with Sec.  
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 Sec.  405.1834 or reopened 
by the intermediary hearing officer(s) in accordance with Sec.  
405.1885 through Sec.  405.1889. Final intermediary hearing decisions 
are subject to the provisions of Sec.  405.1803(d).
    13. A new section 405.1834 is added to read as follows:


Sec.  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 Sec.  405.1813(e)(1) and Sec.  405.1814(c)(3)); and
    (ii) Any final intermediary hearing decision (see Sec.  405.1831).
    (3) Non-final decisions and other non-final 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 
Sec.  405.1813(e)(2), Sec.  405.1814(d), and Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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

[[Page 35750]]

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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec. Sec.  405.1885 through 
405.1889. Decisions of a CMS reviewing official are subject to the 
provisions of Sec.  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 Sec.  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 Sec.  405.1831 and Sec.  405.1833.
    14. Section 405.1835 is revised to read as follows:


Sec.  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 
Sec.  405.1839) is $10,000 or more; and
    (3) Unless the provider qualifies for a good cause extension under 
Sec.  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 Sec.  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 Sec.  
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.

[[Page 35751]]

    (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 Sec.  405.1885(c)(1).
    15. Section 405.1836 is added to read as follows:


Sec.  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 Sec.  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 Sec.  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 Sec.  405.1840(c)). A copy of the 
Board's Dismissal Decision must be mailed promptly to each party to the 
appeal (see Sec.  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 
Sec.  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 Sec.  405.1885 through Sec.  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 Sec.  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:


Sec.  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 Sec.  405.1835(a), except for the $10,000 amount in 
controversy requirement under Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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--

[[Page 35752]]

    (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 Sec.  
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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  405.1837(c)(1)(ii)). After receiving 
the notice from the providers, the Board must make jurisdictional 
findings in accordance with Sec.  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 Sec.  
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 Sec.  405.1837(a) and Sec.  
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 Sec.  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 Sec.  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 Sec.  405.1811, Sec.  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 Sec.  405.1835(a)(3)) and from the 60-day period for adding 
issues to any single provider appeal (see Sec.  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 Sec.  405.1837(a)(2) and Sec.  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 Sec.  
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 Sec.  405.1811 or Sec.  405.1835 or file a separate 
request for a hearing as part of a different group appeal under this 
section, as applicable.

[[Page 35753]]

    17. Section 405.1839 is revised to read as follows:


Sec.  405.1839  Amount in controversy.

    (a) Single provider appeals. (1) In order to satisfy the amount in 
controversy requirement under Sec.  405.1811(a)(2) for an intermediary 
hearing or the amount in controversy requirement under Sec.  
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 Sec.  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 Sec.  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 Sec.  405.1840 is added to read as follows:


Sec.  405.1840  Board jurisdiction.

    (a) General rules. (1) After a request for a Board hearing is filed 
under Sec.  405.1835 or Sec.  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 Sec.  405.1842 of this part); permitting 
discovery (see Sec.  405.1853).
    (ii) Issuing a subpoena (see Sec.  405.1857).
    (iii) Conducting a hearing (see Sec.  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 
Sec.  405.1842 of this part) and hearing decision (see Sec.  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 Sec.  405.1835 of 
this part or as part of a group appeal under Sec.  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 Sec.  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 Sec.  405.1804 of this part.
    (3) Any self-disallowed cost, except as permitted in Sec.  
405.1835(a)(1)(ii) and Sec.  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 
Sec.  405.1842 of this part or a Hearing Decision under Sec.  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 Sec.  405.1836(e)(1) and Sec.  
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

[[Page 35754]]

must be mailed promptly to each party to the appeal (see Sec.  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 
Sec.  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 
Sec. Sec.  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 Sec.  405.1875(a)(2) of this part, or during the 
course of judicial review of a final agency decision as described in 
Sec.  405.1877(a) of this part, as applicable.


Sec.  405.1841  [Removed]

    19. Section 405.1841 is removed.
    20. Section 405.1842 is revised to read as follows:


Sec.  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 Sec.  405.1840 of 
this part), and the Board determines it lacks the authority to decide 
the legal question (see Sec.  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 Sec.  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 Sec.  
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 Sec.  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 
Sec.  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 Sec.  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 Sec.  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:

[[Page 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 Sec.  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 Sec.  
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 
Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  405.1875(a)(2) and (e) of this part) may be 
reopened in accordance with Sec. Sec.  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 Sec.  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 Sec.  405.1842(g)(1) 
and Sec.  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

[[Page 35756]]

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 Sec.  405.1840(d), Sec.  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 Sec.  
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 Sec.  405.1842(g)(1) and 
Sec.  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 Sec.  405.1843 is revised to read as follows:


Sec.  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 Sec.  405.1835 or Sec.  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 Sec.  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 Sec.  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:


Sec.  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 Sec.  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 Sec.  405.1875(a)(2) constitutes the Board's decision.
    (e) Hearings. The Board may conduct a hearing and issue a Hearing 
Decision (see Sec.  405.1871) on a specific matter at issue in an 
appeal, provided it finds jurisdiction over the matter at issue in 
accordance with Sec.  405.1840 of this part and determines it has the 
legal authority to fully resolve the issue (see Sec.  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 Sec.  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 Sec.  
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 Sec.  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 Sec.  405.1855 of this part), and any written argument 
or comments timely submitted to the Board (see Sec.  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 
Sec.  405.1875(a)(2) of this part), or of judicial review of a final 
agency decision as described in Sec.  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 Sec.  405.1875(a)(2)(iv)).
    23. Section 405.1853 is revised to read as follows:


Sec.  405.1853  Board proceedings prior to any hearing; discovery.

    (a) Preliminary narrowing of the issues. Upon receiving 
notification that

[[Page 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 Sec.  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 non-party, 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 
self-sworn declaration describing the movant's efforts to resolve or 
narrow the discovery dispute.

[[Page 35758]]

    (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 Sec.  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 Sec.  405.1875(a)(2), or of judicial review of a 
final agency decision as described in Sec.  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 Sec.  
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:


Sec.  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 Sec.  405.1840(a) of this part.
    (ii) At the request of a party for purposes of discovery (see Sec.  
405.1853 of this part) or an oral hearing (see Sec.  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 Sec.  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 Sec.  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 non-party 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 non-

[[Page 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 Sec.  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 non-party 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 Sec.  
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 Sec.  
405.1875(a)(2) of this part, or of judicial review of a final agency 
decision as described in Sec.  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 Sec.  
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:


Sec.  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 non-party (see Sec.  
405.1853(d) and Sec.  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 Sec.  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 Sec.  
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 Sec. Sec.  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 Sec.  405.1853(d) and Sec.  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).


Sec.  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 Sec.  405.1868 is added to read as follows:

[[Page 35760]]

Sec.  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 Sec.  
421.120, Sec.  421.122, and Sec.  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 Sec.  
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 
Sec.  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 
Sec. Sec.  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 Sec.  405.1875(a)(3)) or judicial review (see Sec.  
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 Sec.  405.1875(a)(2) or of judicial review of a 
final agency decision as described in Sec.  405.1877(a), as applicable.
    28. Section 405.1869 is revised as follows:


Sec.  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 
Sec.  405.1840, and the legal authority to fully resolve the matter in 
a hearing decision (see Sec.  405.1842(f)(3), Sec.  405.1867, and Sec.  
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 Sec.  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 Sec.  
405.1840; and
    (2) The specific matter at issue was timely raised in an initial 
request for a Board hearing filed in accordance with Sec.  405.1835 or 
Sec.  405.1837, as applicable, or in a timely request to add issues to 
a single provider appeal submitted in accordance with Sec.  
405.1835(c).
    (b)(1) If the Board has jurisdiction to conduct a hearing on a 
specific matter at issue solely under Sec.  405.1840 and Sec.  405.1835 
or Sec.  405.1837, as applicable, and the legal authority to fully 
resolve the matter in a hearing decision (see Sec. Sec.  
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 Sec.  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 Sec.  405.1840 and Sec.  405.1835 or Sec.  
405.1837, as applicable.
    (ii) The specific matter at issue was timely raised in the request 
for a Board hearing filed in accordance with Sec.  405.1835 or Sec.  
405.1837, as applicable.
    29. Section 405.1871 is revised to read as follows:


Sec.  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 Sec.  405.1840(a) and 
Sec.  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 Sec.  405.1845(f)(3) and Sec.  
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 Sec.  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.

[[Page 35761]]

    (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 Sec.  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 Sec.  405.1803(d), 
unless a decision is the subject of judicial review (see Sec.  
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 Sec. Sec.  
405.1885 through 405.1889.


Sec.  405.1873  [Removed].

    30. Section 405.1873 is removed.
    31. Section 405.1875 is revised to read as follows:


Sec.  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 
Sec. Sec.  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 Sec.  405.1871).
    (ii) A Board Dismissal Decision (see Sec.  405.1836(e)(1) and 
(e)(2), Sec.  405.1840(c)(2) and (c)(3), Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  
405.1871(a).
    (3) The Board erred in refusing to admit certain evidence or in not 
considering other submitted matter (see Sec.  405.1855 and Sec.  
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 non-party 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 Sec.  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

[[Page 35762]]

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 non-party 
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 Sec.  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 non-party, 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 non-
party.
    (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 Sec.  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 Sec.  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 Sec.  405.1803(d) unless that final 
decision is the subject of judicial review (see Sec.  405.1877). The 
Administrator in accordance with Sec.  405.1885 through Sec.  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 Sec.  405.1877(a)(4)) or 
the provisions of Sec.  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.

[[Page 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 Sec.  405.1877(g)(2)).
    32. Section 405.1877 is revised to read as follows:


Sec.  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 Sec.  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 Sec.  
405.1875(a)(2)(i) through (a)(2)(iii) or, in a particular case, is 
deemed to be final by the Administrator under Sec.  405.1875(a)(2)(iv); 
and
    (ii) Is not reversed, affirmed, modified, or remanded by the 
Administrator under Sec.  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 Sec.  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 Sec.  405.1875(a)(2)(i) through 
(a)(2)(iii) or deemed to be final by the Administrator in a particular 
case under Sec.  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 Sec.  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 Sec.  405.1875(a)(2), 
whether through inaction or in a written notice issued under Sec.  
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 Sec.  
405.1875(c)(2), any issue in a Board decision specified as final, or 
deemed as final by the Administrator, under Sec.  405.1875(a)(2) and he 
or she subsequently makes a decision within the 60-day review period 
(see Sec.  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 Sec.  405.1877(a)(3)). If the Administrator timely 
vacates the Board's decision and remands for further proceedings (see 
Sec.  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 Sec.  405.1877(a)(3)).
    (4) Administrator accepts review and timely decision is not 
rendered. If the Administrator decides to review, in a notice under 
Sec.  405.1875(c)(2), any issue in a Board decision specified as final, 
or deemed to be final by the Administrator, under Sec.  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 Sec.  405.1875(a)(1) and Sec.  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 Sec.  411.15 of this chapter, is not reviewable by the Board 
(see Sec.  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 
Sec.  405.1804 and Sec.  405.1840(b)(2).
    (3) Any Board remand order, or discovery ruling or subpoena 
specified in Sec.  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 non-final Board actions, including any such Board remand order, 
discovery ruling, and, except as provided in Sec.  405.1857(e), 
subpoena, is limited to

[[Page 35764]]

review of a final agency decision as described in Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  405.1803(d) and Sec.  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 Sec.  405.1834, Sec.  
405.1875(f)(4)).
    (h) Implementation of final court judgment. (1) Where a final, non-
appealable 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 Sec.  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:


Sec.  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 Sec.  
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 Sec.  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 Sec.  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

[[Page 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 Sec.  
405.1833, Sec.  405.1871(b), Sec.  405.1875, Sec.  405.1877(a)), a 
final, non-appealable 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 Sec.  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 Sec.  405.1887(a).
    34. Section 405.1887 is revised to read as follows:


Sec.  405.1887  Notice of reopening; effect of reopening.

    (a) In exercising its reopening authority under Sec.  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 Sec. Sec.  
405.1885(c)(3) and (c)(4).
    (b) Upon receipt of the notice required under Sec.  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 Sec.  405.1889).
    35. Section 405.1889 is revised to read as follows:


Sec.  405.1889  Effect of a revision; issue-specific 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 Sec.  405.1885, 
the revision must be considered a separate and distinct determination 
or decision to which the provisions of Sec.  405.1811, Sec.  405.1834, 
Sec.  405.1835, Sec.  405.1837, Sec.  405.1875, Sec.  405.1877 and 
Sec.  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.


Sec.  413.30  [Amended]

    37. The last sentence in paragraph (c)(1) of Sec.  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 Sec.  
405.1813 and Sec.  405.1836 of this chapter, respectively.
* * * * *


Sec.  413.40  [Amended]

    38. Paragraph (e)(5) of Sec.  413.40 is revised to read as follows:
* * * * *
    (e) * * *
    (5) Extending the time limit for review of NPR. The time required 
to review the

[[Page 35766]]

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 Sec.  405.1813 and Sec.  405.1836 of this 
chapter, respectively.
* * * * *


Sec.  413.64  [Amended]

    39. The last sentence in paragraph (j)(1) of Sec.  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 Sec.  
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.


Sec.  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 Sec.  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 Sec.  405.1801(b)(2) of 
this chapter.''


Sec.  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 Sec.  
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 Sec.  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