[Federal Register Volume 73, Number 101 (Friday, May 23, 2008)]
[Rules and Regulations]
[Pages 30190-30267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-11227]



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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; 
Final Rule

  Federal Register / Vol. 73, No. 101 / Friday, May 23, 2008 / Rules 
and Regulations  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 413, and 417

[CMS-1727-F]
RIN 0938-AL54


Medicare Program; Provider Reimbursement Determinations and 
Appeals

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final 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 the sake of simplicity, 
throughout this final 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 subpart R regulations, the Provider Reimbursement Review Board (the 
Board) has the authority to adjudicate certain substantial 
reimbursement disputes between providers and fiscal intermediaries 
(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 subpart R regulations, intermediaries have the 
authority to hold hearings and adjudicate certain other payment and 
reimbursement disputes with providers. This final rule updates, 
clarifies, and revises 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: Effective Date: These regulations are effective August 21, 2008.
    Applicability Date: These regulations are applicable to all appeals 
pending as of, or filed on or after August 21, 2008, except as noted in 
sections II.Y. and III.Y. of this final rule.

FOR FURTHER INFORMATION CONTACT: Morton Marcus, (410) 786-4477; Donald 
Romano, (410) 786-1401.

SUPPLEMENTARY INFORMATION: To help readers locate information in this 
final rule, we are providing the following Table of Contents.
I. Background
    A. Legislative and Regulatory History and Development
    B. Medicare Modernization Act Requirements for Issuance of 
Regulations
II. Provisions of the Proposed Rule and Public Comments and 
Responses
    A. Definitions of Entities That Review Intermediary 
Determinations or Decisions by Such Entities; Definition of 
Reimbursement (Sec.  405.1801(a))
    B. Calculating Time Periods and Deadlines (Sec.  405.1801(a) and 
Sec.  405.1801(d))
    C. Providers Under Subpart R; Limited Applicability to Non-
Provider Entities (Sec.  405.1801(b))
    D. Provider Hearing Rights (Sec.  405.1803(d), Sec.  405.1811, 
and Sec.  405.1835)
    1. Provider Dissatisfaction With Medicare Reimbursement; Revised 
Self-Disallowance Policy
    2. Audits of Self-Disallowed Items
    3. Determining Timeliness of Hearing Requests (Sec.  405.1811 
and Sec.  405.1835)
    4. Contents of Hearing Request
    E. Provider Requests for Good Cause Extension of Time Period for 
Requesting Hearing (Sec.  405.1813 and Sec.  405.1836)
    F. Intermediary Hearing Officer Jurisdiction (Sec.  405.1814)
    G. CMS Reviewing Official Procedure (Sec.  405.1834)
    H. Group Appeals (Sec.  405.1837)
    I. Amount in Controversy (Sec.  405.1839)
    J. Board Jurisdiction (Sec.  405.1840)
    K. Expedited Judicial Review (Sec.  405.1842)
    L. Parties to Proceedings in a Board Hearing or Intermediary 
Hearing (Sec.  405.1843 and Sec.  405.1815)
    M. Quorum Requirements (Sec.  405.1845)
    N. Board Proceedings Prior to Hearing; Discovery in Board and 
Intermediary Hearing Officer Proceedings (Sec.  405.1853 and Sec.  
405.1821)
    O. Subpoenas (Sec.  405.1857)
    P. Record of Administrative Proceedings (Sec.  405.1865 and 
Sec.  405.1827)
    Q. Board Actions in Response to Failure to Follow Board Rules 
(Sec.  405.1868)
    R. Scope of Board's Authority in a Hearing Decision (Sec.  
405.1869 and Sec.  405.1829)
    S. Board Hearing Decision and Intermediary Hearing Decision 
(Sec.  405.1871, Sec.  405.1831 and Sec.  405.1833)
    T. Administrator Review (Sec.  405.1875)
    U. Judicial Review (Sec.  405.1877)
    V. Reopening Procedures (Sec.  405.1885 through Sec.  405.1889)
    W. Three Additional Proposals Under Consideration
    X. Technical Revisions
    Y. Effective Date
    Z. Children's Health Graduate Medical Education Program (CHGME)
III. Provisions of the Final Rule
IV. Collection of Information Requirements
    A. Information Collection Requirements (ICRs) Introduction 
(Sec.  405.1801)
    B. ICRs Regarding the Right to Intermediary Hearing; Contents 
of, and Adding Issues to, Hearing Request (Sec.  405.1811)
    C. ICRs Regarding Good Cause Extension of the Time Limit for 
Requesting an Intermediary Hearing (Sec.  405.1813)
    D. ICRs Regarding CMS Reviewing Official Procedure (Sec.  
405.1834)
    E. ICRs Right to Board Hearing; Contents of, and Adding Issues 
to, Hearing Request (Sec.  405.1835)
    F. ICRs Regarding Good Cause Extension of Time Limit for 
Requesting a Board Hearing (Sec.  405.1836)
    G. ICRs Regarding Group Appeals (Sec.  405.1837)
    H. ICRs Regarding Amount in Controversy (Sec.  405.1839)
    I. ICRs Regarding Expedited Judicial Review (Sec.  405.1842)
V. Regulatory Impact Statement
VI. Regulation Text

I. Background

A. Legislative and Regulatory History and Development

    Section 1878(a) of the Social Security Act (the Act) allows 
providers to appeal to the Board final determinations made by a fiscal 
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 Tax Equity and 
Fiscal Responsibility Act of 1982 (TEFRA) payment system) of the Act. 
In addition, by regulation, providers are given the right to appeal to 
the Board or fiscal 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 TEFRA, Public Law 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.
    The Social Security Amendments of 1983, Public Law 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

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retrospective reimbursement system to a system based on prospectively 
set rates; that is, a PPS. 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), Public Law 
105-33, established a PPS for home health agencies (HHAs), for 
rehabilitation hospitals, and for all skilled nursing facilities 
(SNFs). The Balanced Budget Refinement Act of 1999, Public Law 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 (for example, 
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. (The term ``intermediary'' includes both fiscal 
intermediaries and Medicare Administrative Contractors for the purpose 
of this final rule.) 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.  405.1801(a)(1), Sec.  405.1801(a)(2), and Sec.  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). 
These include: 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 an 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 these providers (see Sec.  413.30); a denial of certain 
hospice payments (see Sec.  418.311); or 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 (for 
example, end-stage renal dialysis (ESRD) 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 of 
the regulations. 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. (This type of appeal is known as a group 
appeal.) (Note that under section 1878(f)(1) of the Act, any appeal to 
the Board by providers under common ownership or control must be 
brought by these providers as a group regarding any matter involving an 
issue common to these providers. We interpret this provision to apply 
only where the amount in controversy for the common issue is at least 
$50,000.) Decisions by the intermediary hearing officer(s) or the Board 
are subject to further review. Prior to the implementation of this 
final rule, intermediary hearing officers' decisions have been subject 
to review by a CMS reviewing official pursuant to section 2917 of the 
Provider Reimbursement Manual (PRM), Part 1. Now, Sec.  405.1834 
provides for this review. Also, under this final rule, no provisions 
remain 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 more than 30 
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, as well as 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 preexisting rules governing the intermediary 
determination, NPR, intermediary hearing, and reopening. These 
regulations were redesignated as Subpart B 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 
revise many of the subpart R regulations governing provider 
reimbursement determinations and appeals. As noted previously, the 
principal provisions of the regulations are more than 30 years old. In 
the intervening period, various issues have arisen regarding provider 
reimbursement determinations and

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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 huge 
backlog of cases before the Board (which, at the present time, is 
approximately 6,800 cases). Experience gained through long use of the 
regulations indicates that revisions to the regulations would lead to a 
more effective and efficient appeal process. We recognize that the 
Board's inventory of pending cases is dependent in some ways on factors 
outside of its control (for example, the number of hearing requests 
filed). However, we believe that the revisions made in this final rule 
will help the Board reduce the case backlog (or at least forestall 
substantial additions to it), and will also reflect changes in the 
statute, clarify our policy on various issues, and eliminate outdated 
material. The Board's instructions for providers and intermediaries, as 
well as the Board's decisions on specific cases brought before it, are 
available on the CMS Web site, which, as of the date of publication of 
this final rule, is http://www.cms.hhs.gov/PRRBReview.

B. Medicare Modernization Act Requirements for Issuance of Regulations

    Section 902 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amended section 
1871(a) of the Act and requires the Secretary, in consultation with the 
Director of the Office of Management and Budget, to establish and 
publish regular timelines for the publication of Medicare final 
regulations based on the previous publication of a Medicare proposed or 
interim final regulation. Section 1871(a)(3)(B) of the Act, as amended 
by section 902 of the MMA, also states that the timelines for these 
regulations may vary but shall not exceed 3 years after publication of 
the preceding proposed or interim final regulation, except under 
exceptional circumstances. Section 1871(a)(3)(B) of the Act further 
provides that if the Secretary intends to vary such a timeline with 
respect to the publication of a final regulation, the Secretary shall 
publish in the Federal Register notice of the different timeline by not 
later than the timeline previously established with respect to such 
regulation. On June 22, 2007, a notice was published in the Federal 
Register extending by one year (or until June 25, 2008) the timeframe 
for publishing this final rule (see 72 FR 34425). Therefore, this final 
rule has been published within the time limit imposed by section 902 of 
the MMA.

II. Provisions of the Proposed Rule and Public Comments and Responses

    On June 25, 2004, we published a proposed rule in the Federal 
Register (69 FR 35716) that set forth proposed regulations seeking to 
update, clarify, and revise various provisions of the regulations 
governing provider reimbursement determinations, appeals before the 
intermediary hearing officers and the Board, and Administrator review 
of decisions made by the Board. For purposes of the summary of the 
proposed provisions and for the comments and responses, we are using 
the same lettering sequence that appeared in the proposed rule. In each 
lettered section, we provide a description of our proposals and a 
summary of the changes from the proposed rule that we have made in this 
final rule. A more extensive description of the proposals is contained 
in the proposed rule, and a brief summary of the changes appears at 
section III.

A. Definitions of Entities That Review Intermediary Determinations or 
Decisions by Such Entities; Definition of Reimbursement (Sec.  
405.1801(a))

    We proposed definitions for ``intermediary hearing officer''; ``CMS 
reviewing official''; ``CMS Reviewing official procedure''; 
``Administrator review''; and ``reviewing entity.'' We received no 
comments on these proposed definitions and we are adopting them without 
change. We note that we incorrectly stated that we were proposing a 
definition for ``reimbursement.''

B. Calculating Time Periods and Deadlines (Sec.  405.1801(a) and Sec.  
405.1801(d))

    We proposed specific provisions to address the timeframes for 
appealing determinations, including those for determining the beginning 
and end of a specific appeal period. Generally, we proposed to 
calculate the beginning period of an appeal as the date a party 
receives a triggering notice, and the end period for an appeal as the 
date by which a reviewing entity must receive the party's submission. 
We proposed a definition for ``date of receipt'' with respect to the 
method we would use to determine the date 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. Specifically, we 
proposed a rebuttable presumption whereby the receipt date of documents 
sent by a reviewing entity to providers, intermediaries and other 
entities would be 5 days after the postmark date. For materials 
submitted to a reviewing entity, we proposed the establishment of a 
presumption that the receipt date is the date the reviewing entity 
stamps the document ``Received.'' We also proposed that, where a 
reviewing entity could not conduct business due to extraordinary 
circumstances beyond its control, the designated time period would 
resume on the next work day the reviewing entity was again able to 
conduct business. Finally, we proposed that the last day of a 
designated time period would be excluded if it fell on a Saturday, 
Sunday, or Federal legal holiday.
    We are amending our proposed definition of ``Date of Receipt'' in 
Sec.  405.1801(a) to provide that, where a request for an intermediary 
or Board hearing, a request to add issues to a Board or intermediary 
hearing, or any other document or material is transmitted to a 
reviewing entity by a nationally-recognized, next-day courier service 
(for example, the U.S. Postal Service Express Mail, Federal Express, 
UPS, or DHL), the ``Date of Receipt'' is presumed to be the date of 
delivery noted by the courier, unless it can be shown by clear and 
convincing evidence that the materials were received on a different 
date. We are also amending the definition of ``Date of Receipt'' to 
provide that, where a nationally-recognized, next-day courier service 
is not employed to deliver materials to a reviewing entity, the ``Date 
of Receipt'' is presumed to be the date stamped ``Received'' by the 
reviewing entity, unless it can be shown by clear and convincing 
evidence that the materials were received by some other date. The 
reviewing entity's determination of whether the presumption of the 
correctness of the date of delivery, or the date stamp, is overcome by 
clear and convincing evidence is final and binding (that is, it is not 
subject to further administrative or judicial review).
    Comment: One commenter supported our proposal that the timeframe 
for requesting an intermediary hearing or a Board hearing should run 
from the date of receipt of the appealable decision. Another commenter 
agreed that the ``5-day presumption'' gave an accurate determination of 
the date of receipt of a document. One commenter suggested that the 
``5-day presumption'' should be used by a reviewing entity when it 
sends and receives materials.
    Three commenters suggested the rule should offer some reassurance 
that the reviewing entity would, in fact, stamp ``Received'' on the 
document on the day of arrival. One of these commenters also suggested 
using ``date of mailing'' as a

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measure of timeliness. Another commenter stated that date stamps are 
unverifiable and suggested that the Board should consider an electronic 
docket system that would allow parties to view the actual dates of 
receipt of filings and Board actions via the Internet. Another 
commenter suggested the use of a reliable ``intermediary'' (for 
example, the United States Postal Service, because it would provide a 
single source of date verification) instead of relying solely on the 
determination of the Board. This commenter suggested that the current 
``mailbox rule'' be retained.
    Response: After reviewing all of the comments received regarding 
the calculation of the various time periods and deadlines set for 
appealing final determinations, we have decided to adopt our proposals 
as final, with the modifications noted below, regarding the receipt of 
documents by a reviewing entity. We continue to believe that the best 
and most consistent way to establish a beginning and ending date for 
purposes of determining the various appeal periods is through the use 
of ``date of receipt.'' (We also note that employing a ``date of 
mailing'' can present some practical problems, such as unreadable 
postmark dates.) With respect to the situation in which a party (or 
interested non-party) to a proceeding receives a document from a 
reviewing entity or from another party, we have established a 5-day 
presumption for receipt of that document. The presumption may be 
rebutted if a preponderance of the evidence establishes that the 
document was actually received on a later date. The 5-day presumption 
does not apply in the case where the reviewing entity is on the 
receiving end of a document from a party (or non-party) to the 
proceeding. Except as noted below, the receipt date in this instance is 
the date the reviewing entity date stamps the document as ``Received.'' 
We have decided not to include a 5-day presumption for the receipt of 
documents by reviewing entities because there is a presumption of 
administrative regularity in agency action. This doctrine presumes that 
an arm of a Federal agency, such as the Board, will act responsibly, 
fairly, and legally in its duty to provide an appeals forum for 
providers of Medicare services. Thus, it is reasonable to presume that 
the actual receipt date of a document submitted to a reviewing entity 
is the date the reviewing entity stamps ``Received'' on the document. 
Nonetheless, although we believe that materials will be timely and 
accurately stamped ``Received'' by the Office of Hearings, we wish to 
avoid any confusion or possible prejudice to a provider, as well as any 
protracted disputes as to when a document was received. We also 
recognize the importance of the timeframes for both requesting a Board 
or intermediary hearing and for requesting that issues be added prior 
to a Board or intermediary hearing. Therefore, we are amending our 
definition of ``Date of Receipt'' in Sec.  405.1801, to provide that, 
where a request for hearing or a request to add issues prior to a 
hearing, or any other document or material is delivered to a reviewing 
entity by a nationally-recognized next-day courier service, the ``Date 
of Receipt'' shall be presumed to be the date of delivery as noted by 
that courier service, unless it can be shown by clear and convincing 
evidence that the material was received on a different date. Further, 
in order to strongly encourage the use of next-day couriers (especially 
for requests for appeal and for requests to add issues), we are 
amending the definition of ``Date of Receipt'' to provide that, where a 
nationally-recognized next-day courier service is not employed to 
deliver materials to the reviewing entity, the ``Date of Receipt'' 
shall be presumed to be the date stamped ``Received'' by the reviewing 
entity, unless it is established by clear and convincing evidence that 
the materials were actually received on a different date. In order to 
prevent collateral litigation, the reviewing entity's determination as 
to whether clear and convincing evidence exists to establish that the 
materials were received on a date different from the delivery date or 
the date stamped ``Received'' is not subject to further administrative 
or judicial review. (We considered requiring, upon penalty of refusal 
to accept, that any request for a hearing or request to add issues be 
delivered by a next-day courier service.)
    Finally, we note that, although it is not feasible at this time for 
the Office of Hearings to administer an electronic docket system, such 
a system may be implemented in the future.
    Comment: One commenter suggested that the 5-day presumption for 
receipt of documents from a reviewing entity be five business days 
instead of five calendar days because of weekends.
    Response: We believe that five calendar days is a sufficient period 
of time (and we note that mail is picked up and delivered on 
Saturdays).
    Comment: One commenter stated that reviewing entities should accept 
filings via facsimile (fax), with originals to follow, and use the date 
indicated on the fax as the date of receipt.
    Response: The Office of the Attorney Advisor, which assists in the 
Administrator review process, has allowed parties to submit fax copies. 
This practice reflects the short timeframes for Administrator review 
and the small number of appeals that are pending in the office at any 
one time. In contrast, the Office of Hearings, which assists the Board 
in its review, has declined to allow fax transmissions of provider 
requests for Board hearings and other relevant documents. The Office of 
Hearings' practice reflects the voluminous number of appeals pending in 
that office and the large number of documents submitted (several of 
which may be due on the same date), making the acceptance of facsimile 
transmissions impractical. We are not limiting either the Office of the 
Attorney Advisor or the Office of Hearings in determining the best 
office practice for the receipt of documents. Additionally, there may 
be future technological innovations that will make other modes of 
submission feasible, which these offices may wish to have the 
flexibility to adopt. Therefore, we decline to specify in regulations 
whether the Office of Hearings or Office of Attorney Advisor may or 
must accept fax transmissions, or hand delivery, or other modes of 
submission, and, consistent with present practice, will leave it to the 
discretion of these offices as to the additional types of submission 
they will accept.
    Comment: One commenter requested that we clarify the types of 
relevant evidence (for example, a provider date stamp) that would prove 
that materials sent by a reviewing entity were received by a provider 
beyond the 5-day presumption period.
    Response: We decline to specify types of evidence that will 
necessarily establish that a document was received more than five days 
after the postmark date. Rather, whether a piece of evidence (for 
example, an affidavit from the party or a date stamp from the party) is 
persuasive that a document was received more than 5 days after the 
postmark date would be determined in context with any other relevant 
evidence in a particular case.
    Comment: One commenter believed that providers should be allowed to 
request extensions of timeframes for appeal in situations involving 
employee strikes or extended absence due to illness or maternity leave.
    Response: In section II.E. of this final rule, regarding ``Provider 
Requests for Good Cause Extension of Time Period for Requesting 
Hearing,'' we state the rule that an appeal period may be extended for 
``good cause'' only in cases

[[Page 30194]]

where a provider can establish that it could not reasonably have been 
expected to submit a hearing request within 180 days due to 
extraordinary circumstances beyond its control.

C. Providers Under Subpart R; Limited Applicability to Non-Provider 
Entities (Sec.  405.1801(b))

    We proposed 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 proposed to recognize specifically a hospital, 
critical access hospital, SNF, comprehensive outpatient rehabilitation 
facility, HHA, and hospice program. Also, a RHC and a FQHC would be 
included in accordance with section 1878(j) of the Act, and an 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. We received no comments on this section and 
are adopting our proposals without change.

D. Provider Hearing Rights (Sec.  405.1803(d), Sec.  405.1811, and 
Sec.  405.1835)

    Under section 1878(a) of the Act, and Sec.  405.1835 and Sec.  
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 that the amount in controversy requirement is at 
least $1,000 but less than $10,000. In this section of the proposed 
rule, we proposed changes regarding the first and third jurisdictional 
requirements; that is, provider dissatisfaction with Medicare 
reimbursement and the timeliness of hearing requests. We are making 
several changes to the proposed rule.
    Under Sec.  405.1811(a)(1), and Sec.  405.1835 (a)(1), a provider 
has a right to an intermediary or Board hearing, as a single provider 
appeal, for specific items claimed for a cost reporting period covered 
by an intermediary or Secretary determination, if the provider 
preserves its right to claim dissatisfaction with the amount of 
Medicare payment for the specific item(s) at issue. The provider can 
preserve this right either by claiming the cost on its cost report or, 
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)), by ``self-disallowing a specific item(s) by 
following the applicable procedures for filing a cost report under 
protest.'' We have amended Sec.  405.1811(a)(1) and Sec.  
405.1835(a)(1) to be effective for cost reporting periods that end on 
or after December 31, 2008. This revision will be beneficial to both 
providers and intermediaries. The delay in the effect of the 
requirement will benefit providers because they will have additional 
time to evaluate whether they wish to file a cost report item under 
protest. This change will also eliminate the transitional 
administrative burden that intermediaries otherwise would have faced 
under the proposal, which would have necessitated that providers file 
requests to amend previously filed cost reports to explicitly file cost 
report items under protest.
    In response to comments, we have clarified Sec.  405.1811(b) and 
Sec.  405.1835(b) to provide that, where required information is not 
submitted with the hearing request, the intermediary hearing officer or 
Board, as applicable, may dismiss with prejudice the appeal, or take 
any other remedial action that the reviewing entity considers 
appropriate. We believe that this approach is consistent with the 
approach we have taken in section Sec.  405.1868 (``Board Actions in 
Response to Failure to Follow Board Rules'') in which we similarly 
leave to the Board's discretion whether to dismiss an appeal or take 
some other, lesser action.
    We are amending proposed Sec.  405.1835(c)(3) to address possible 
misleading and unnecessary language concerning adding an issue to an 
appeal of a revised NPR. Proposed Sec.  405.1835(c)(3) stated that a 
request to add an issue to an appeal is timely if ``[t]he 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).'' We have deleted the language in Sec.  
405.1835(c)(3) pertaining to a request to add issues following a 
reopening. We note that we did not include such language in the 
corresponding proposed intermediary hearing officer regulations at 
Sec.  405.1811(c)(3). Such language is potentially misleading in that 
it may suggest incorrectly that a notice of reopening is the trigger 
point for appealing an issue, whereas, in fact, under our longstanding 
policy (which is reaffirmed in this final rule at Sec.  405.1889), only 
those matters actually revised and specifically contained in a revised 
determination following a notice of reopening are appealable. We also 
believe the language is unnecessary because a revised determination is 
treated the same under our rules as an original determination for 
purposes of the time in which to request a hearing or add an issue. 
Thus, if a revised NPR containing two distinct revisions were issued, 
and a provider timely appealed one of the revisions (that is, within 
180 days after the date of receipt by the provider of the revised NPR), 
it could add the second revision as an issue within 60 days after the 
expiration of the 180-day period for appealing the revised NPR.
    In Sec.  405.1811(b)(2)(i) and Sec.  405.1835(b)(2)(i), we proposed 
that a provider would be required to explain its dissatisfaction with 
the amount of Medicare payment for the specific item(s) at issue by 
stating why Medicare payment is incorrect for each disputed item. We 
acknowledge that there may be instances in which a provider may be 
uncertain as to whether Medicare payment is incorrect because it does 
not have access to underlying data (for example, data from a State 
agency). Accordingly, we have revised Sec.  405.1811(b)(2)(i) and Sec.  
405.1835(b)(2)(i) to allow a provider to explain why it is unable to 
determine whether payment is correct as a result of not having access 
to underlying information.
    Further, in response to a commenter's suggestion that providers be 
required to list their parent corporation at the time of filing a 
single appeal so as to assist the Board in identifying providers under 
common ownership, we are adding new Sec.  405.1835(b)(4) to require a 
provider under common ownership or control to furnish the name and 
address of its parent corporation and to provide a statement that: (1) 
To the best of the provider's knowledge, no other provider to which it 
is related by common ownership or control, has pending a request for a 
Board hearing pursuant to this section or pursuant to

[[Page 30195]]

Sec.  405.1837(b)(1) on any of the same issues contained in the 
provider's hearing request for a cost reporting period that falls 
within the same calendar year as the calendar year covered by the 
provider's hearing request; or (2) a pending appeal(s) exist(s), and 
the provider name(s) and provider number(s), and the case number(s) (if 
assigned), for such appeal(s).
    Finally, in preparing this final rule, we have corrected minor 
wording inconsistencies between Sec.  405.1811, which pertains to 
intermediary hearings, and Sec.  405.1835, which pertains to Board 
hearings, where appropriate.
    Comment: One commenter stated that the section on who is entitled 
to a hearing should be clarified to include those entities that were 
formerly providers or the successor organizations that retained 
responsibility for previously filed cost reports following a change of 
ownership. In recent years, numerous tax-exempt organizations sold 
hospital operations and the proceeds went to local charitable 
foundations. Frequently, those organizations retained responsibility 
for filed cost reports, and the rules should be clarified to grant 
hearing rights to those organizations regarding those cost reports.
    Response: We made no specific proposal concerning the hearing 
rights of former providers or successor organizations following a 
change in ownership. However, we appreciate the concerns raised by the 
commenter and, therefore, we may seek to address this issue in a future 
rulemaking or through other instructions.
1. Provider Dissatisfaction With Medicare Reimbursement; Revised Self-
Disallowance Policy
    We proposed that, 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, which are contained currently in section 115 of 
the PRM, Part II (CMS Pub. 15-2), for filing a cost report under 
protest. We stated that we believed our proposal was appropriate under 
the Supreme Court's decision in Bethesda Hospital Association v. Bowen, 
485 U.S. 399 (1988). We further stated that we believed that our 
proposed policy was a reasonable response to statements by the Bethesda 
providers and others that it was 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. We noted that it has been our 
longstanding policy that a cost report claim at variance with Medicare 
policy is not improper, provided that the claim is not intended to 
procure an intermediary determination (or reviewing entity decision) by 
fraud or similar fault. We are adopting our proposal, effective with 
cost reporting periods ending on or after December 31, 2008.
    Comment: One commenter recommended that the text of section 115 et 
seq. of the PRM, Part II, be placed in the regulations. The commenter 
noted that these sections of the PRM have not changed since 1980. 
Another commenter stated that the protested amount line on the cost 
report is available for situations where a provider is not in agreement 
with Medicare policy and that CMS should be holding that out as the way 
to assert differences of opinion with Medicare policy.
    Response: We are adopting the proposal, which is essentially a 
codification of the protested amount line procedures set forth in 
section 115 et seq. of the PRM, Part II. We are modifying the proposal 
so that the requirement, that a provider self-disallow an item by 
following the applicable procedures for filing a cost report under 
protest, is effective for cost reporting periods ending on or after 
December 31, 2008.
    Comment: One commenter stated that the final rule should require 
that, when a provider self-disallows an item in accordance with the 
proposed policy, the provider should specifically identify the 
regulation or other authority the provider is challenging as invalid, 
and that the appeal should be limited to that challenge. The commenter 
stated that some providers have been misusing the protested line amount 
procedure. Specifically, the commenter said that it was aware of 
instances in which a provider listed a claim related to bad debts in 
the protested line amount. According to the commenter, the provider was 
not challenging any policy related to bad debts, but rather lacked the 
documentation for its bad debts claim and was using the protested 
amount procedure as a way of avoiding a possible reopening denial based 
on Program Memorandum A-01-141 (December 14, 2001). According to the 
commenter, this program memorandum gives intermediaries discretion to 
deny a reopening request where a provider was culpable in not 
adequately documenting its claim and where the claim was reported not 
under protest, but rather was made in the cost report proper.
    Response: Although we encourage providers to identify the specific 
manual provision, CMS Ruling, regulation, or statutory section that 
they believe prevents them from receiving payment for the self-
disallowed item, we are not requiring through these regulations that 
they do so. We are attempting to strike a balance between, on the one 
hand, having providers present enough information so as to put the 
intermediaries on notice as to actual or potential reimbursement 
disputes, and, on the other hand, not making it unduly burdensome for 
providers to file cost reports. For the same reason, we are 
encouraging, but not requiring, providers to identify in the hearing 
request the specific authority they believe prevents them from 
receiving reimbursement for a self-disallowed item. We note, however, 
that where the authority allegedly preventing reimbursement for the 
self-disallowed item is a CMS Ruling, regulation or statute, the 
provider may wish to seek expedited judicial review (EJR) early in the 
appeals process, in accordance with the procedures under Sec.  
405.1842, or the Board may wish to explore granting EJR on its own 
motion. If the provider does seek EJR or the Board initiates own motion 
consideration of EJR, the provider would need to identify at that time 
the specific authority that it believes prevents it from receiving 
reimbursement for the self-disallowed item. We caution that the fact 
that we are not requiring by regulation that providers identify in the 
hearing request the specific authority at issue should not be seen as 
preventing the Board from issuing instructions that would require 
providers to do so. Under section 1878(e) of the Act, the Board has the 
authority to issue instructions governing hearings before it, provided 
that those instructions are not inconsistent with the statute or 
regulations of the Secretary.
    Finally, although some providers may be using the protested line 
amount procedures inappropriately, as alleged by the commenter, we do 
not believe that mischaracterizing a documentation issue (or some other 
issue) as a self-disallowance prevents an intermediary from denying a 
reopening request. Program Memorandum A-01-141

[[Page 30196]]

Chapter 8, section 60.1 of CMS Pub. 100-06, states that intermediaries 
should inform providers that, as a general rule, they will not honor 
reopening requests for audit adjustments based on lack of 
documentation, but it also does not require intermediaries to allow all 
requests for reopening audit adjustments that are not based on (or are 
not characterized by the provider as based on) lack of documentation. 
Moreover, under the self-disallowance policy contained in this rule, 
providers should not self-disallow items for which they do not have a 
good faith belief that the items may not be allowable under Medicare 
payment policy. Under Sec.  405.1835, in order to preserve its appeal 
rights, a provider must either include a claim for the specific item on 
its cost report, or, where it has a good faith belief that the item may 
not be allowable under Medicare policy, list the item on the cost 
report. Therefore, if a provider were to simply list an item as a self-
disallowed item, when the provider is aware that the issue is one of 
documentation and not policy, the provider would run the risk that the 
appeal of that item would be dismissed.
    Comment: Several commenters asserted that the proposal that the 
provider identify an item as a ``protested amount'' was inconsistent 
with the Supreme Court's decision in Bethesda. For example, two 
commenters, using identical language, stated that the Supreme Court 
concluded that providers could claim ``dissatisfaction,'' within the 
meaning of the statute, without incorporating their challenge in the 
cost reports filed with their fiscal intermediaries, and that our 
proposal directly contradicted the Supreme Court's conclusion by 
mandating that a provider had to claim dissatisfaction by incorporating 
a challenge into the cost report through either declaring the item as a 
cost or declaring it as a protested item. One commenter said that the 
Supreme Court concluded in Bethesda that no statute or regulation 
expressly mandated that a challenge to the validity of a regulation be 
submitted first to the intermediary, and that it would be futile to 
submit challenges based on regulations, statutes or CMS's formal 
policies to the intermediary before seeking Board review; therefore, 
the proposed policy was in direct violation of clear statutory 
authority. Another commenter said that rather than reflecting the 
reasoning and findings of Bethesda, the proposed policy appeared to 
have adopted the narrowing of Bethesda in Little Company of Mary 
Hospital and Health Centers v. Shalala, 24 F.3d 984 (7th Cir. 1994). 
According to this commenter, the Little Company of Mary Hospital case 
narrowed the Bethesda decision by providing that in order for a 
provider to be able to self-disallow a cost, there must be a statute, 
regulation or CMS ruling that makes reimbursement of an item 
unallowable. This commenter stated that the Little Company of Mary 
Hospital case was the decision of a single circuit and therefore 
conflicts with the more general proposition of the Supreme Court in 
Bethesda.
    Response: It has been our longstanding view that providers that 
fail to claim on their cost reports costs that are allowable under the 
Medicare law and regulations cannot meet the ``dissatisfaction'' 
requirement. See, for example, Little Co. of Mary Hosp. & Health Care 
Ctrs. v. Shalala, 165 F.3d 1162 (7th Cir. 1999). This proposed change 
would simply codify in our regulations our longstanding interpretation 
of ``dissatisfaction.''
    We continue to believe that our proposed policy that a provider 
must either include a claim for reimbursement of a cost on its cost 
report or self-disallow the cost in order for the Board to obtain 
jurisdiction over an appeal pertaining to that cost is consistent with 
the Supreme Court's decision in Bethesda. We believe the commenters 
that specifically mentioned Bethesda have misunderstood the import of 
Bethesda on our proposal. In Bethesda, providers that submitted their 
cost reports to their intermediary complied with the Secretary's 
regulation by self-disallowing malpractice insurance costs in excess of 
the regulation. The providers then filed a request for a hearing before 
the Board to contest the regulation, and the Board dismissed for lack 
of jurisdiction. Ultimately, the Supreme Court rejected the Secretary's 
position that section 1878(a)(1)(A)(i) of the Act, which requires that 
a provider be dissatisfied with a final determination of its fiscal 
intermediary, ``necessarily incorporates an exhaustion requirement.'' 
The Court found that this ``strained interpretation'' of a statutory 
exhaustion requirement was inconsistent with the express language of 
the statute. (Bethesda, 485 U.S. at 404.) The Court agreed that, under 
section 1878(a)(1)(A)(i) of the Act, a provider's dissatisfaction with 
the amount of its total reimbursement is a condition of the Board's 
jurisdiction, but held that ``it is clear, however, that the submission 
of a cost report in full compliance with the unambiguous dictates of 
the Secretary's rules and regulations does not, by itself, bar the 
provider from claiming dissatisfaction with the amount of reimbursement 
allowed by those regulations. No statute or regulation expressly 
mandates that a challenge to the validity of a regulation be submitted 
first to the fiscal intermediary. * * * Thus, [the providers in this 
case] stand on different ground than do providers who bypass a clearly 
prescribed exhaustion requirement or who fail to request from the 
intermediary reimbursement for all costs to which they are entitled 
under applicable rules. While such defaults might well establish that a 
provider was satisfied with the amounts requested in its cost report 
and awarded by the fiscal intermediary, those circumstances are not 
presented here.'' (Bethesda, 485 U.S. at 404-05 (emphasis added).) In 
sum, although the Supreme Court in Bethesda held that the Secretary may 
not rely on section 1878(a)(1)(A)(i) as explicitly requiring providers 
to present challenges to a regulation to their intermediaries as a 
condition to the Board's jurisdiction, the Court specifically 
recognized that the Secretary could impose an exhaustion requirement by 
regulation, and that a provider who fails to claim all costs to which 
it is entitled may fail to meet the jurisdictional prerequisite of 
dissatisfaction. We note that we are not requiring providers to claim 
costs or items that they believe may not be in accordance with Medicare 
payment policy--rather, we are merely requiring that the provider list 
such items on the cost report by following the protested line amount 
procedures.
    In Bethesda, the providers listed on their cost reports the costs 
at issue, but deliberately did not claim them. As noted by the Ninth 
Circuit in Adams House Health Care v. Bowen, 862 F.2d 1371, 1375 n.3 
(9th Cir. 1988), the question was left open by Bethesda as to whether 
the Board is deprived of jurisdiction to hear an appeal concerning a 
cost that was omitted entirely from the cost report. We interpret 
section 1878(a)(1) of the Act to mean that a provider is not 
``dissatisfied'' with a final determination of the intermediary or the 
Secretary regarding any matter that is omitted from the cost report, 
and that, as a result, the Board does not have jurisdiction to hear an 
appeal regarding the matter. Although the Supreme Court in Bethesda 
indicated that if a provider were to bypass a ``clearly prescribed 
exhaustion requirement'' it ``might well'' be precluded from raising 
the issue before the Board, we believe our proposal to be even less 
than an exhaustion requirement. We believe it to

[[Page 30197]]

be more akin to simply a presentment requirement.
    We do not believe that the Little Company of Mary Hospital decision 
is inconsistent with the Supreme Court's decision in Bethesda. As the 
Seventh Circuit in Little Company of Mary Hospital noted, Bethesda 
``says only that a provider can challenge a rule before the Board even 
after `admitting' that the rule is applicable when submitting its 
expenses to the intermediary,'' and that Bethesda ``strongly suggests 
that a hospital that does not ask its intermediary to reimburse it for 
all the costs for which it is entitled cannot, on appeal to the Board, 
first ask for new costs.'' (24 F.3d at 992-93, emphasis in the 
original.) Thus, Little Co. of Mary was not a narrowing of Bethesda, as 
one commenter asserted. Rather, it was an application of Bethesda to 
the facts before it, facts that mirrored the language quoted above from 
Bethesda.
    We recognize that the First Circuit's majority opinion reached a 
contrary result in Maine General Medical Center v. Shalala, 205 F.3d 
493 (1st Cir. 2000). Because Maine General relied on a pre-Bethesda 
decision that analyzed Board jurisdiction under 42 U.S.C. 1395oo(d), 
and not 42 U.S.C. 1395oo(a), as required by Bethesda, and because it 
failed to recognize the implications of the Bethesda dicta, we believe 
that Maine General was incorrectly decided.
    Although no commenters raised the argument that the 
``dissatisfaction'' requirement applies only to the total amount of 
program reimbursement reflected in the NPR, and that 
``dissatisfaction'' therefore does not need to be expressed with 
respect to each issue challenged on appeal, we note that a provider 
successfully made this argument in Loma Linda University Medical Center 
v. Leavitt, 492 F.3d 1065 (9th Cir. 2007). We respectfully submit that 
the Ninth Circuit erred in its analysis. Although there may be nothing 
in the statute indicating that dissatisfaction must be expressed with 
respect to ``each claim'', there also is nothing in the statute 
indicating that the Secretary cannot interpret the dissatisfaction 
requirement in this manner. The statute thus is ambiguous on this 
point, and the Ninth Circuit should have accorded deference to the 
Secretary's interpretation, particularly in light of the Secretary's 
expertise in how the Medicare provider reimbursement process works.
    Specifically, an intermediary makes distinct reimbursement 
determinations for each expense item and then sums these distinct 
determinations. The ``final determination,'' which here is the NPR, 
thus is not simply one total amount. Rather, it is comprised of many 
individual calculations representing the various items for which the 
provider seeks payment. A provider rarely, if ever, would challenge 
before the Board its payment for every discrete item that goes into the 
total reimbursement figure. Instead, a provider challenges discrete 
elements of the total amount, only some of which may be reviewed by the 
Board. Dissatisfaction with total reimbursement thus is based on 
dissatisfaction with items that result in total reimbursement, and it 
is completely reasonable to interpret 42 U.S.C. 1395oo(a) to require 
dissatisfaction to be shown with respect to each issue being appealed.
    Moreover, Bethesda involved the question of whether the Board had 
jurisdiction over one particular issue, not whether it had jurisdiction 
over an entire NPR. Bethesda thus implicitly assumes that jurisdiction 
must be obtained on an issue-specific basis. Furthermore, the facts of 
Little Co. of Mary make clear that, in that case, the provider was 
dissatisfied with other issues in its NPR. Yet this dissatisfaction 
with the overall total amount of program reimbursement did not affect 
the court's decision in that case.
    We also note that the Secretary's interpretation of the statutory 
language at 42 U.S.C. 1395oo(a) is consistent with court decisions 
related to reopenings. In those cases, the courts refrained from 
similar attempts to exaggerate the significance of the statutory phrase 
at 42 U.S.C. 1395oo(a) ``total program reimbursement due the 
provider.'' Your Home Visiting Nurse Servs. v. Shalala, 525 U.S. 449, 
453 (1999) (Board lacks jurisdiction over intermediary's ``refusal to 
reopen * * * [which] is not a `final determination * * * as to the 
amount,' but rather a refusal to make a new determination''). In HCA 
Health Services of Oklahoma v. Shalala, 27 F.3d 614 (D.C. Cir. 1994), 
the court noted that ``when an intermediary revisits only certain 
specified determinations contained in the original NPR * * * [p]art of 
the final determination is obviously contained in that portion of the 
original NPR which was never revisited, while the remaining elements 
are clearly to be found in the reopening decision.'' 27 F.3d at 617 
(emphasis added). The court thus recognized that the ``final 
determination'' is really comprised of many individual determinations.
    Finally, an issue-specific requirement of ``dissatisfaction'' has a 
sound policy basis. If providers were able to claim items for the first 
time during a Board appeal simply because they had expressed 
dissatisfaction with respect to other cost items, the Board would be 
required to assume responsibilities that are more appropriately borne 
by fiscal intermediaries rather than by a ``review'' board. Such a 
system also would provide an end-run around the deadline for filing an 
accurate cost report, as providers could file ``placeholder'' appeals 
with respect to items claimed on their cost reports with the knowledge 
that they could always make additional claims later.
    In any event, even if the Board has jurisdiction under the statute 
to hear an appeal concerning an item that was omitted entirely from the 
cost report, whether the cost is one that may be allowable or the item 
involves a challenge to a binding regulation, manual instruction or CMS 
Ruling, this jurisdiction is not mandatory. In Maine General Medical 
Center v. Shalala, 205 F.3d 493 (1st Cir. 2000), the majority held that 
the statute did not deprive the Board of jurisdiction to hear a claim 
involving a cost omitted from a cost report, but it adopted the 
Secretary's position that even if the Board had jurisdiction ``it would 
be entirely permissible for the Board to conclude, as a matter of 
policy, not to hear [the] claim.'' (Maine General, 205 F.3d at 501.) 
The court continued: ``All we hold is that Congress did not, in the 
statute, require the Board to reach this result by stripping it of 
jurisdiction. This outcome preserves some flexibility for the agency, 
which may be exactly what Congress intended. It is not our job to 
exercise that flexibility for the agency.'' (Id.) See also Loma Linda, 
492 F.3d at 1072-73 (holding that Board jurisdiction is discretionary).
    Sections 1102(a) and 1871(a) of the Act authorize the Secretary to 
issue regulations for the efficient administration of the Medicare 
program. Irrespective of whether the Board has jurisdiction under the 
statute to hear an appeal concerning an item that was omitted entirely 
from the cost report (and we do not agree with the Maine General or 
Loma Linda cases on this point), the requirement that providers either 
claim an item on their cost reports or, where the item involves a 
challenge to a binding regulation, manual instruction or CMS Ruling, 
list the disputed item in accordance with the longstanding instructions 
contained in section 115 of the PRM, Part II, fits comfortably within 
our statutory authority to issue regulations to administer the Medicare 
program and is a reasonable exercise of that authority. Providers are 
already required, for program integrity reasons, to list ``protested 
items;'' that is, items for

[[Page 30198]]

which they believe they are entitled to receive payment, but for which 
they believe that their intermediaries would disallow, on the basis 
that reimbursement for such items is contrary to regulation or policy 
interpretation. Under section 115 of the PRM, Part II, providers that 
do not wish to risk running afoul of the cost report certification 
process, by including an item on their cost reports that is contrary to 
Medicare regulations or payment policy, are allowed to include these 
items on the ``protested amount'' line on their cost reports. We 
believe it is reasonable to require providers to notify their 
intermediaries, via their cost report submission, of all items for 
which they potentially may be claiming reimbursement. Such a 
requirement allows the Medicare program to estimate better its 
potential liabilities and to issue changes or clarifications to its 
policies, and allows intermediaries to estimate better their workload 
and audit priorities. Also, if we were to adopt a policy that providers 
have to list on their cost reports only those items that they believe 
are in accord with Medicare payment policy, the Board would be required 
to continue adjudicating disputes as to whether an omitted cost is or 
is not in accord with Medicare payment policy (because if the omitted 
cost were in accord with Medicare payment policy, the provider would 
not have the right to a hearing).
    Comment: One commenter stated that it disagreed with the proposed 
policy that would require providers to identify self-disallowed issues 
as protested items. Providers have to trust the information with which 
they are provided when preparing cost reports and follow the directions 
that have been issued. The individuals who prepare cost reports may not 
have the background, time, or ability to evaluate or question whether 
the data provided by government sources or the instructions that have 
been issued should be challenged. This provision may put undue pressure 
on individuals who prepare cost reports, and could increase 
administrative costs as providers seek professional help to identify 
issues of which the providers may not be aware. According to the 
commenter, it can take a considerable amount of research and 
investigation into issues to discover that errors exist in the 
underlying government data used to prepare the cost report. Once this 
discovery is made, it seems appropriate that the error be corrected and 
adjustments made. Providers should not be held responsible for 
discovering errors made by government bodies.
    Another commenter stated that it is impractical to expect providers 
to file under protest every potential item on their cost reports that 
may be disallowed under the applicable regulations or manual 
provisions. Providers are faced with overwhelming numbers of regulatory 
and policy manual issuances covering a complex array of constantly 
changing Medicare billing and documentation requirements. According to 
the commenter, there is no basis in law or equity for CMS's attempt to 
cut off providers' appeal rights because the providers may not 
recognize the invalidity of a particular intermediary's interpretation 
of CMS's regulations and policies at the time they file their cost 
reports.
    Response: We do not believe that there should be any significant 
difficulty for providers in identifying items for which they believe 
they should receive payment in derogation of Medicare payment policy. 
Upon deciding that it does, in fact, wish to challenge Medicare payment 
policy with respect to one or more item(s) the provider has self-
disallowed, the provider should include the item(s) in its request for 
a hearing, or add the issue later, in accordance with the procedures 
for adding issues under Sec.  405.1835(c). The Medicare program expects 
provider personnel, whether on the provider's staff or outside 
professionals, to have the background, time, and ability to complete 
and understand the cost reporting requirements.
    Comment: One commenter stated that the statute does not require 
that providers indicate in the cost report that they will be 
dissatisfied with a final determination, and that CMS is placing form 
over substance in this regard. This commenter said that, although 
increasing efficiency within the appeal system is a worthwhile goal, 
any efficiency gain does not justify providers' loss of their rights to 
appeal meritorious claims by virtue of inadvertence to procedural 
requirements that are not obvious.
    Response: We do not agree that our requirement amounts to a 
procedural requirement that is not obvious to providers. The statute at 
42 U.S.C. 1395oo(a) requires that a provider express dissatisfaction 
with a determination of the intermediary or the Secretary. Arguably, 
therefore, a provider could not be dissatisfied with a determination 
that does not explicitly or implicitly address an item, because the 
item is neither claimed nor even listed on the cost report. Moreover, 
many providers are already availing themselves of the protested line 
amount procedures contained in section 115 of the PRM, Part II. In any 
event, in addition to the legal notice that providers are receiving 
through this final rule, we anticipate that providers will informally 
be alerted to the provisions of this rule, including the self-
disallowance policy, through hospital associations and other provider 
organizations, law firms, trade publications and others.
    Comment: Several commenters stated that by requiring providers to 
follow the procedures in the PRM for filing a cost report under 
protest, more administrative work will be created for the hospitals and 
the intermediaries because the item or cost has to be manually claimed 
and the impact manually calculated. The commenters further stated that 
the intermediaries must manually review each protested cost or item and 
decide to remove or allow, and that the intermediaries' failure to do 
so would automatically reimburse providers for the cost or item.
    Response: We believe that our self-disallowance policy will not 
create a significant amount of work for most providers and 
intermediaries, for several reasons. First, many providers are already 
using the protested line amount procedures contained in section 115 of 
the PRM, Part II. Also, the commenters are incorrect that the item or 
cost has to be manually ``claimed'' on the cost report.
    We do not believe that providing an estimate of the self-disallowed 
item will prove burdensome to providers. Moreover, if the provider 
believes that listing the item on the cost report is worthwhile, the 
provider may have already engaged in an estimate of sorts, and in any 
event, if the provider does decide to appeal the item, it should 
estimate the reimbursement effect of the item at that time. Finally, 
intermediaries are not required to review each protested cost or item 
to decide to remove or allow that cost or item. Whereas, at one time, 
items appearing on the protested amount line were ``above the line'' 
(that is, they appeared before, and made up part of, the total claim 
for reimbursement), that is no longer the case. On the current cost 
report, the protested amount appears ``below the line'' and is not 
included in the provider's total claim for reimbursement.
2. Audits of Self-Disallowed Items
    We proposed that, where a provider is successful in obtaining 
reimbursement for a self-disallowed item, the intermediary must audit 
the item to determine the proper reimbursement effect.

[[Page 30199]]

    Comment: Three commenters believed that our proposal was 
unnecessary. One commenter stated that it does not have an objection in 
principle with the proposal that an intermediary must audit self-
disallowed items after a decision awarding them to the provider, and 
said that its experience has been that in every instance in which 
providers have successfully challenged a CMS policy, payment has been 
audited or reviewed for accuracy under the agreement of the parties to 
the dispute. The second commenter believed that the proposal was 
unnecessary because CMS already has the right to, and routinely does, 
instruct its intermediaries to perform additional auditing steps before 
issuing an NPR as a result of a final agency determination. The third 
commenter stated that the Board would expect that self-disallowed items 
would be unaudited.
    Response: The final decision awarding reimbursement for a self-
disallowed item may come from the Board, the Administrator, or a court. 
Although we believe that, in most instances, the administrative or 
judicial body that issues a decision would not specify a dollar figure 
for reimbursement, the proposal was intended to ensure that 
intermediaries, in fact, have the opportunity to determine the correct 
amount of reimbursement after an award is made. We believe that it 
would be inappropriate for the administrative or judicial body to award 
a specific amount for reimbursement without the benefit of an audit by 
the intermediary. Of course, the intermediary could audit the self-
disallowed item prior to an award, but this would mean that the 
intermediary would be spending resources to determine an amount for an 
item that, under Medicare policy, would not be awarded.
    Comment: Three commenters said that the regulations should place a 
limit on the time an intermediary has to conduct the audit of the 
awarded self-disallowed item. One commenter stated that the regulations 
should set forth a reasonable time limit to audit and calculate 
payment, and that 60 days certainly should be sufficient. The second 
commenter stated that, whereas the need for an accurate determination 
of the amount of reimbursement is important, the proposal threatens to 
prolong indefinitely the closure of the appeal, because no limit is 
placed on the time the intermediary would have to complete the audit. 
The third commenter stated that any audit subsequent to a decision to 
pay a self-disallowed item should occur within a limited period of 
time.
    Response: We agree that in all cases intermediaries should complete 
the audit of an awarded self-disallowed item in a reasonable amount of 
time. We decline to impose a specific time limit on intermediaries for 
auditing self-disallowed items, however, because what is reasonable in 
a given case will depend in part on the scope and complexity of the 
audit and the provider's cooperation, as well as the intermediary's 
other program priorities.
    Comment: Two commenters disagreed with the proposal to permit 
intermediaries to audit self-disallowed costs that are ultimately 
awarded during the appeals process. In the first commenter's view, the 
proposal offends the judicial principle of finality and gives the 
Medicare program ``two bites at the apple.'' According to the 
commenter, the intermediary has enough time between the time that a 
provider appeals a self-disallowed cost and a Board hearing for an 
intermediary to audit or otherwise evaluate or question the amount of 
the claim. The other commenter stated that the proposal to require 
intermediaries to audit eventual awards of self-disallowed costs could 
result in an entirely new disallowance and appeal based on new grounds. 
A provider could be forced to litigate the same items multiple times, 
which would be inconsistent with the due process rights of the 
provider. Any audit subsequent to a decision to pay a self-disallowed 
item should be restricted to a determination of the payment amount, and 
should not open new grounds for disallowance.
    Response: We disagree that the proposal is counter to the principle 
of finality, or that it would give the Medicare program ``two bites at 
the apple.'' The purpose of the proposal was not to allow the 
intermediary to relitigate the question of whether the provider is 
entitled to reimbursement for the self-disallowed item, but rather to 
ensure that the intermediary has the opportunity to determine the 
reimbursement effect of the final decision awarding that self-
disallowed item. We believe the language in Sec.  405.1803(d)(3), that 
CMS may require the intermediary to ``audit'' a self-disallowed item, 
sufficiently conveys that, under this provision, the intermediary is 
restricted to determining the amount of program reimbursement, and not 
whether the item should be allowed. Although the intermediary could 
audit the self-disallowed item prior to an award, the intermediary 
would be spending resources to determine the correct amount for an item 
that may not, and, at least from the perspective of the program, should 
not be awarded.
    Comment: One commenter stated that one way to minimize the problem 
of unaudited self-disallowed costs would be to allow the provider and 
the intermediary to enter into a stipulation regarding whether the 
self-disallowed costs have been audited. Another commenter stated that 
a more practical procedure would be for the parties to stipulate the 
amount in controversy, with an audit by the intermediary, if necessary, 
at the outset of the appeal, rather than after a possibly lengthy 
process.
    Response: We believe that a stipulation that the amount at issue 
for a self-disallowed cost that has not been audited may be helpful, 
but would not be an adequate substitution for our proposal, which would 
prohibit the award of a specific amount of reimbursement in the absence 
of an audit. Where the intermediary knows the amount of potential 
reimbursement during the pendency of an appeal, either because it has 
audited the issue or otherwise has the necessary information, the 
intermediary can stipulate to the amount at issue. Intermediaries are 
in the best position to know their workload priorities and to decide on 
allocation of their resources. We are not preventing intermediaries 
from determining the amount at issue prior to a decision awarding the 
reimbursement at issue; rather, the purpose of the proposal was to 
prevent intermediaries from being forced to audit the amount of 
reimbursement prior to a decision favorable to the provider.
    Comment: One commenter stated that the regulations should make 
clear that any dispute with regard to an audit or calculations would 
remain in the jurisdiction of the entity that rendered the last merits 
decision.
    Response: We decline to require that the entity that awarded the 
reimbursement for the self-disallowed item maintain continuing 
jurisdiction in case there is a dispute concerning the audit. We would 
have no authority to require a court, once having remanded the case for 
an audit by the intermediary, to retain continuing jurisdiction over 
the case. The Board or the Administrator may not see the need to 
maintain continuing jurisdiction over the case, once having ruled for 
the provider on the self-disallowed item. To the extent that the 
provider disagrees with the calculation of the audited item, the 
provider may bring a new appeal to the intermediary or to the Board, if 
the

[[Page 30200]]

provider meets the amount in controversy requirements.
3. Determining Timeliness of Hearing Requests (Sec.  405.1811 and Sec.  
405.1835)
    We proposed to revise our regulations to provide that the 180-day 
period for requesting a Board or intermediary 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. We received one comment 
on this issue, which pertained more closely to our proposed definition 
for ``date of receipt'' and to our proposal for a presumption that 
documents from a reviewing entity are received within 5 days of their 
mailing, unless a preponderance of the evidence establishes that they 
were received later than the 5-day period. Accordingly, we have 
addressed this commenter's concerns in section II.B. of this final 
rule.
4. Contents of Hearing Request
    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 proposed that the original hearing 
request include a demonstration (through argument and supporting 
documentation) that the provider satisfies the jurisdictional 
requirements for the hearing request. We also proposed that, in order 
to facilitate the reviewing entity's ability to determine compliance 
with our proposed self-disallowance rules, the hearing request must 
contain a description of the nature and amount of each self-disallowed 
item and the reimbursement sought for each item. Finally, we proposed 
clarifying the current requirement that a hearing request include 
supporting documentary evidence. We stated that we were aware of 
various cases in which the need to determine Board jurisdiction over a 
specific matter at issue had 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 the Board would not be able to 
make appropriate findings of fact and conclusions of law about its 
jurisdiction 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.
    Comment: One commenter stated that the proposed rule would place an 
unreasonable burden on providers to look into the future and defend 
against unknown jurisdictional challenges that may arise. This 
commenter proposed that, if jurisdictional documentation must be 
submitted with the original hearing request, the intermediary should be 
required to read it and determine within a reasonable period of 60 to 
90 days if any jurisdictional issues exist. Arbitrary jurisdictional 
challenges by intermediaries have increased dramatically in recent 
years, created additional demands on Board resources, and have caused 
substantial delays in cases moving through the administrative process. 
Once the Board has taken jurisdiction over an issue, that decision 
should have some finality. According to the commenter, if CMS's intent 
is to reduce the backlog, an administrative process that is fair to 
both the provider and the intermediary should be established.
    Response: We disagree that requiring a brief demonstration in 
writing that the request for hearing meets the jurisdictional 
requirements constitutes an unreasonable burden on providers. The party 
seeking relief before an administrative or judicial tribunal has the 
burden of demonstrating that the tribunal has jurisdiction over its 
claim or appeal. In most cases, the jurisdictional question will be 
straightforward and the provider will either be able to demonstrate 
easily that the intermediary hearing officer(s) or the Board has 
jurisdiction, or, at the least the provider will be able to anticipate 
arguments concerning jurisdictional deficiencies. With respect to the 
commenter's assertion that some intermediaries make arbitrary 
jurisdictional challenges, we believe that claims presented by 
providers, as well as defenses raised by intermediaries, should be made 
in good faith. If an intermediary has raised a defense, jurisdictional 
or otherwise, that does not have a reasonable basis in law or fact, or 
has not raised a reasonable jurisdictional defense in a timely manner, 
the intermediary's conduct should be reported to the Board, and if the 
Board believes it to be appropriate, the Board can refer the matter to 
CMS for possible action. This is not to say that, where an intermediary 
has raised a jurisdictional defense that is similar to one that it or 
another intermediary has raised unsuccessfully before, the intermediary 
would be precluded from raising the jurisdictional defense if it was 
otherwise reasonable. (However, in that situation, the intermediary 
should note its jurisdictional objections to the Board in a way so as 
not to delay the resolution of the appeal and, if necessary and 
appropriate, renew its jurisdictional objections in a request for 
Administrator review of the Board's final determination on the merits.) 
Similarly, we do not believe that an intermediary should purposely 
delay making jurisdictional defenses, but, again, the burden is on the 
provider to demonstrate jurisdiction, and we decline to either impose a 
specific time period for an intermediary to raise jurisdictional 
defenses or to provide that, having once determined that jurisdiction 
exists, the Board is precluded from revisiting the issue. Additional 
facts that are developed during the course of proceeding before the 
Board may cause the intermediary to challenge, and the Board to deny, 
jurisdiction. In civil litigation, jurisdictional defects can generally 
be raised at any time, even on appeal. Although a court may be obliged 
to dismiss a case for lack of jurisdiction even where the 
jurisdictional objection is made at a late stage in the proceedings, it 
reserves the authority to sanction a party if the party has 
unreasonably delayed in making the objection. If the Board believes 
that an intermediary has unreasonably delayed in making a 
jurisdictional objection, it may refer the matter to CMS for possible 
action.
    Comment: One commenter stated that an issue included in a hearing 
request may at times be reopened by the intermediary with a partial 
revision being made. Such a revised determination by the intermediary 
should not preclude the provider from continuing to appeal the balance 
of the issue on the basis that it fails to meet the amount in 
controversy requirement. The Board should preclude any jurisdictional 
challenge in this situation. There is no need for jurisdictional review 
in these circumstances.
    Response: If a provider satisfies the amount in controversy 
requirement at the time it files its appeal, a subsequent revision or 
partial revision to an issue or issues that causes the remaining 
controversy to go below $10,000 (or $50,000 in the case of a group 
appeal) will not deprive the Board of jurisdiction to hear the appeal. 
We have added new paragraph (c)(4) to Sec.  405.1839 to clarify this 
point.
    Comment: One commenter stated that the proposed requirements for 
documenting a provider's position in the original hearing request 
creates an unreasonable burden due to the time and effort to prepare 
the documentation. As a result, this requirement would effectively 
reduce the 180-day filing period, in violation of the statute.

[[Page 30201]]

    Response: We do not believe that the proposed requirements for 
documenting a hearing request are onerous. As we stated in the proposed 
rule (69 FR 35723) requiring providers to include certain information 
in their hearing requests facilitates an early focus by the parties and 
the Board that the jurisdictional requirements for a hearing are met.
    Comment: One commenter said that the cost of developing 
documentation could be unnecessary for those issues that are likely to 
be resolved through the administrative resolution process. Because the 
resolution process typically results in a provider accepting less than 
full reimbursement for a disputed issue, if providers are forced to 
incur the costs of developing documentation, the costs of going forward 
with a hearing may be justified. As a result, more cases may go to 
hearing and fewer cases may be settled and withdrawn.
    Response: We do not believe that the proposed requirements for 
documenting a hearing request are onerous. Moreover, we do not believe 
that a provider would be able to reach an administrative resolution 
with an intermediary on an issue without developing at least as much 
documentation as would be needed for a hearing request on that issue.
    Comment: One commenter recommended that the final rule add a 
provision requiring that providers include intermediary documentation 
on the disallowances appealed, and that the intermediaries in turn be 
required to provide supporting documentation to providers. Without 
intermediary supporting documentation, providers cannot, in the hearing 
request, articulate their position and submit documentation in support 
of their position. Currently, many intermediaries justify disallowances 
by citing only general regulatory provisions and do not state why the 
provider did not meet the cited provisions or what auditing standards 
were applied. Medicare and Government Accountability Office rules 
require that the intermediary document reasons for disallowances and 
undergo supervisory review. The commenter stated that if intermediary 
disallowances were properly documented, challenges could be narrowed 
and the case backlog could be reduced.
    Response: In Sec.  405.1835(b)(3), we are requiring providers to 
submit to the Board a copy of the intermediary or CMS determination 
under appeal. Further, providers must submit any other documentary 
evidence that they consider necessary to meet the requirements for 
obtaining a Board hearing. We agree that intermediaries should provide 
at least a brief explanation for the adjustment, so as to put the 
provider on notice as to the reason for the adjustment. However, in 
light of the huge number of adjustments that intermediaries make, and 
in view of the fact that many of these adjustments are not (and would 
not be, regardless of the degree of explanation) appealed, we are not 
requiring intermediaries to provide extensive and detailed explanations 
of their adjustments prior to the filing of a hearing request.
    We also note that the existing requirements in Sec.  405.1803 
dictate that the intermediary include appropriate references to law, 
regulations, CMS Rulings and program instructions to explain why its 
determination of the amount of program reimbursement due to the 
provider differs from the amount claimed by the provider. In addition, 
we note that the current audit instructions for intermediaries contain 
similar requirements. (See CMS Pub. 100-06, Chapter 8, General Audit 
Guidelines, 170, Exhibit VI.) (Further, we believe that the 
intermediary review and adjustment process is outside the scope of this 
rulemaking.) Where a provider disagrees with, or has questions 
concerning, an intermediary's adjustment, the provider may contact the 
intermediary for further clarification. We note that the 180-day period 
for requesting a hearing should allow the parties sufficient time to 
exchange information concerning the basis for the claim and the 
adjustment and the parties' respective positions concerning the 
adjustment. If the provider does not receive a satisfactory response 
from the intermediary concerning the adjustment, the provider may 
appeal the adjustment. The provider should note in its request for a 
hearing the basis for the provider's disagreement, or, where the 
provider believes that it does not have enough information to 
articulate as full an explanation for its disagreement as it would 
prefer, the provider may state that, though it believes that it is 
entitled to a reversal of the adjustment, the provider nevertheless 
lacks enough information to determine at that point the full basis for 
its disagreement with the intermediary. In all cases, through pre-
hearing conference and other communications, or through formal 
discovery if need be, the provider and the intermediary should be able 
to arrive at an understanding of the basis for the provider's claim and 
the intermediary's adjustment. Ultimately, if the provider does not 
present a full basis for its claim, it will be difficult to prevail on 
its appeal, and if the intermediary does not fully support its 
disallowance, it will be difficult for the intermediary to defend its 
adjustment.
    Comment: One commenter stated that it did not believe that 
requiring providers to submit more documentation earlier in the process 
would have much of an impact on relieving caseload. This commenter 
believes that a more effective proposal might be to charge the 
intermediary interest, from the time the provider submits its final 
position paper until the time the case is resolved, on the amount that 
is eventually paid to the provider.
    Response: We do not have the authority to charge interest against 
the intermediary, as the commenter suggests. The payment of interest is 
a waiver of sovereign immunity, which can be effected only through 
legislation enacted by the Congress.
    Comment: One commenter stated that the proposal to require 
providers to demonstrate in the hearing request that they meet the 
requirements for a Board hearing and to include a description of the 
nature and amount of each self-disallowed item and the reimbursement 
sought for each cost was outside CMS's statutory authority. According 
to the commenter, the Congress established the Board as an independent 
tribunal within the Department of Health and Human Services, not 
subject to CMS's direct oversight or control, permitting CMS only to 
review a final decision of the Board after it is issued. Under the 
Medicare statute, only the Board, and not CMS, has full power to make 
rules and establish procedures, not inconsistent with the provisions of 
the statute or the regulations of the Secretary, which are necessary or 
appropriate. This commenter also objected to the proposed requirement, 
that, where the provider is appealing from a revised NPR, the provider 
must 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. CMS's position 
that providers can appeal only issues that were actually adjusted in 
revised NPRs is contrary to the doctrine in Edgewater Hospital v. 
Bowen, 857 F.2d 1123 (7th Cir. 1989). The commenter stated that the 
proposed new requirements for hearing requests would create significant 
new hurdles for providers and make it much more difficult for providers 
to meet appeal deadlines.
    Response: We disagree that we do not have authority under the 
Medicare statute to govern procedures for hearings before the Board. As 
the

[[Page 30202]]

commenter notes, section 1878(e) of the Act provides that the Board's 
operating rules are subject to regulations issued by the Secretary, 
such as this final rule. With respect to the commenter's point that our 
proposal that providers may appeal issues only that were actually 
adjusted in revised NPRs is contrary to the court's decision in 
Edgewater Hospital v. Bowen, we continue to believe that our proposal 
is well-founded. We respond at length in section II.V. of this final 
rule (Reopening Procedures) to the assertion that, based on Edgewater, 
we should allow an appeal of a revised NPR to include an appeal of 
matters that were addressed in a notice of reopening but not actually 
revised.
    Comment: One commenter stated that clarification was necessary 
because providers were adding issues to an appeal of a revised NPR that 
were not within the scope of a revised NPR.
    Response: We agree that one benefit of requiring providers to 
document their position in their request for a hearing is alerting the 
Board as to whether the appeal concerns an issue that was or was not 
within the scope of a revised NPR.
    Comment: Two commenters found confusing the statement in the 
proposed rule (69 FR at 35723-24) that a hearing request would no 
longer be required to include documents necessary to support the 
provider's position on a specific reimbursement matter, because the 
reviewing entity is required to make a preliminary finding of its 
jurisdiction before it considers the merits of a particular issue. One 
of the commenters stated that, in order to determine the merits and 
preliminary findings of its jurisdiction, the intermediary (for 
purposes of an intermediary hearing officer proceeding) needs the 
necessary documents to support the merits of the provider's position. 
The commenter recommended that all supporting documentation, and not 
just documentation in support of jurisdiction, be required to be 
supplied with the hearing request. According to the commenter, 
documentary evidence should be required in order to facilitate a review 
and possible resolution of the issues. A reopening request must be 
accompanied by all supporting documentation, and the same rule should 
apply with respect to hearing requests.
    Response: We note that, because the intermediary hearing officer 
(or the Board in a Board appeal) must make a preliminary determination 
of its jurisdiction (that is, whether the request for hearing was 
timely and whether the amount in controversy requirement was met) prior 
to addressing the merits, the provider would not need initially to file 
documents that pertain only to the merits of the appeal. If, however, 
the provider believes that there is documentation that is necessary to 
support a preliminary determination of jurisdiction and that 
documentation is intertwined with the merits of the appeal, the 
provider must, under Sec.  405.1835(b)(3), submit that documentation 
with its hearing request. Likewise, if the intermediary hearing officer 
or the Board believes that additional documentation is necessary to 
examine jurisdiction, the reviewing entity may request additional 
documentation from the provider. We have amended Sec.  405.1840(a)(2) 
to clarify that, by ``preliminary determination of jurisdiction,'' we 
mean a determination of whether the request for hearing was timely 
(either received within 180 days after the date of receipt by the 
provider of the intermediary or Secretary determination, or the period 
for receipt was extended under Sec.  405.1836), and whether the amount 
in controversy requirement was met.
    Comment: One commenter questioned whether the Board would have the 
ability to dismiss an appeal if required information is not submitted 
with the hearing request. Similarly, another commenter stated that the 
rule should specify whether an imperfect but timely request would be 
dismissed or whether there would be an opportunity for the provider to 
correct the defect.
    Response: Proposed Sec.  405.1811(b) and Sec.  405.1835(b) stated 
that a request for an intermediary or Board hearing ``must'' be 
submitted in writing and ``must'' include certain prescribed items. 
Although one could fairly conclude that a hearing request that would 
meet the requirements of proposed Sec.  405.1811(b) or Sec.  
405.1835(b) would be a prerequisite to obtaining a hearing, the 
proposed rule did not state whether a provider that submits a non-
conforming request would have the opportunity to cure the request, and 
if so, whether the provider could have more than one opportunity to 
cure the request before its appeal would be dismissed. We have 
clarified Sec.  405.1811(b) and Sec.  405.1835(b) to state that the 
intermediary or Board may dismiss with prejudice an appeal that does 
not comply with the requirements of Sec.  405.1811(b) or Sec.  
405.1835(b), or take other action as it deems appropriate. We believe 
that this approach is consistent with the approach we have taken in 
section Sec.  405.1868 (``Board Actions in Response to Failure to 
Follow Board Rules'') in which we similarly leave to the Board's 
discretion whether to dismiss an appeal or take some other, lesser 
action.
    Comment: Two commenters stated that they were concerned that the 
``detailed'' information required for the content of the initial 
hearing request would unduly burden small, rural, and less 
sophisticated providers that would not have the ability to file appeals 
without the assistance of outside expertise. In addition, the proposed 
contents requirements would remove the Board's flexibility to accept 
appeals.
    Response: We do not believe that the proposed requirement is unduly 
burdensome, even for ``small, rural and less sophisticated providers.'' 
As adopted, our proposal requires only that the provider demonstrate 
that it has met the various requirements for obtaining a hearing. As we 
stated in the proposed rule (69 FR 35723), the hearing request would no 
longer need to include documents necessary to support the merits of the 
provider's appeal.
    Comment: One commenter stated that it was concerned with proposed 
requirements that the provider document and provide argument that its 
appeal is strictly and demonstrably within the jurisdiction of the 
appeals panel. Likewise, according to the commenter, the proposed 
requirements for documentation regarding self-disallowance issues seem 
to unfairly shift the burden entirely onto the provider, without 
offering detailed and specific criteria for what is and is not 
acceptable documentation and standards of argument.
    Response: The purpose of proposed Sec.  405.1835(b) was to provide 
the Board with the information necessary to make a preliminary 
determination (timeliness and amount in controversy) as to whether it 
had jurisdiction over the provider's appeal, as well as providing the 
intermediary with the information necessary to determine whether it 
would file a jurisdictional challenge with the Board. A provider would 
not be required to argue its case in detail at this point in the 
process. Rather, as the moving party, the provider would be required 
only to demonstrate that it is dissatisfied with an intermediary or 
Secretary determination and that it has filed its request for a hearing 
timely and that the amount in controversy is at least $10,000.
5. Adding Issues to Original Hearing Request (Sec.  405.1811(c) and 
(Sec.  405.1835(c))
    In the proposed rule, we believed it was necessary to amend the 
regulations addressing the provider's ability to add issues to its 
original hearing request. Currently, a provider is effectively

[[Page 30203]]

allowed to wait for new issues to appear and add issues anytime before 
the hearing begins. It is our view that, because providers may add 
issues to a request at any time prior to a hearing, the ability of the 
Board to conduct hearings and decide cases expeditiously has been 
seriously compromised. At the time of the publication of the June 25, 
2004 proposed rule, there were approximately 10,000 cases at the Board 
that had yet to be resolved. We believed the availability of such an 
extended period for adding issues had become a major obstacle to the 
Board's efforts to reduce its backlog.
    The ability of providers to add issues at any time to a hearing 
request not only has led to larger and more complex cases, but has also 
meant that the Board's ability to schedule and hold hearings 
efficiently has been significantly impaired through the practice of 
some providers of adding issues shortly before the scheduled hearing 
date. Some providers apparently wish to keep a hearing request open as 
long as possible in the hope or anticipation of a favorable court case 
on some reimbursement issue that they can then add to their hearing 
requests. Therefore, we proposed that, rather than having an open-ended 
period for adding issues, it would be appropriate and prudent to allow 
providers a 60-day period for adding issues, commencing with the 
expiration of the applicable 180-day period for filing the original 
hearing request. In essence, this additional 60-day period would afford 
providers an adequate opportunity to appeal all the issues that may 
have been overlooked in the original hearing request. We examined 
section 1878(d) of the Act, which gives the Board the power not only to 
affirm, modify, or reverse the intermediary's determination, but also 
to make any other revisions on matters covered by the cost report, 
regardless of whether these matters were considered by the intermediary 
in its determination. We interpreted this statutory provision to 
address only the Board's powers over a jurisdictionally proper appeal 
under section 1878(a) of the Act; therefore, section 1878(d) does not 
prevent us from limiting the period a provider has to add issues. We 
believe our proposal to allow a 60-day period for adding issues is an 
appropriate exercise of the Secretary's general rulemaking authority 
under sections 1102 and 1871 of the Act.
    Comment: Three commenters supported our proposal. One commenter 
noted that requiring all issues to be identified within our proposed 
timeframe would add huge efficiencies to the process. All three 
commenters stated that providers are afforded ample time to decide 
which items they wish to appeal during the 180-day appeal period.
    Several commenters opposed our proposed change. Some commenters 
suggested that the proposed rule restricts provider appeal rights, 
denies access to appeal, and is contrary to the statute. One commenter 
suggested that the 60-day period is far too brief to allow providers to 
add issues to appeals, and that CMS has provided no additional 
information as to how it determines 60 days to be an appropriate 
period. A few commenters suggested that the Supreme Court's decision in 
Bethesda Hospital Association v. Bowen, 485 U.S. 399 (1988), is 
informative on this issue. Commenters opined that Bethesda made clear 
that, once jurisdiction for a cost reporting year was established, the 
only requirement was ``that the matter must have been covered by such 
cost report.''
    Response: After careful consideration of the comments received in 
this final rule, we are adopting our proposal to include a 60-day 
period for a provider to add issues beyond the 180-day period permitted 
for filing a hearing request. For the efficient administration of the 
appeals process, we believe our policy of having the appeal resolved as 
early as possible, while at the same time giving the parties to the 
hearing ample opportunity to present their cases, is appropriate. 
Following a given cost reporting year, providers have five months to 
file a cost report. (See Sec.  413.24(f)(2).) After a cost report is 
filed, the intermediary typically takes about a year to issue a final 
determination on an unaudited cost report. We believe it is quite 
reasonable to expect that from the time it takes to file a cost report 
to a 240-day period after a final determination has been issued, 
covering a span of approximately two years or more, a provider should 
have sufficient opportunity to identify the issues it wishes to appeal 
for that cost year. The Board will then be able to set a hearing date 
with full knowledge that the hearing will not be further delayed by the 
inclusion of last minute issues.
    We disagree with those commenters that asserted that there is a 
statutory right to add issues at any time prior to a hearing. The 
Medicare statute does not address a timeframe for adding issues to an 
appeal. The only statutory provision related to the timing of an appeal 
is found at section 1878(a)(3) of the Act. There, a provider is 
entitled to request a hearing before the Board if it files a request 
within 180 days after notice of the final determination. We believe it 
is reasonable to read this statutory provision in conjunction with 
section 1878(d) of the Act to mean that a provider must include in its 
notice of appeal all the issues it wants to appeal, especially given 
that section 1878(a)(3) of the Act allows a generous 180-day period to 
request a hearing. Although we continue to believe that providers 
should not be allowed to delay interminably the hearings process by 
adding issues at the last minute before a scheduled hearing date, we 
believe our approach of providing an additional 60 days beyond the 
timeframe for requesting a hearing to add issues that may have been 
overlooked strikes an equitable balance that will serve the interests 
of the parties to the hearing and the Board.
    Section 1878(d) of the Act, the provision upon which some 
commenters relied as granting a right to providers to add issues at any 
time, in fact affords no such right. Section 1878(d) of the Act states 
in relevant part that: ``The Board shall have the power to affirm, 
modify, or reverse a final determination of the fiscal intermediary * * 
* and to make any other revisions on matters covered by such cost 
report * * * even though such matters were not considered by the 
intermediary in making such final determination.'' We interpret section 
1878(d) of the Act as permitting the Board to make revisions to cost 
report items that directly flow from the determination with which the 
provider has expressed dissatisfaction and from which the provider has 
filed a jurisdictionally proper appeal under section 1878(a) of the 
Act. See Little Co. of Mary Hosp. and Health Care Ctrs. v. Shalala, 828 
F.Supp. 570, 576 (N.D. Ill. 1993), aff'd 24 F.3d 984 (7th Cir. 1994). 
However, section 1878(d) of the Act does not pertain to the timing for 
the inclusion of issues, contrary to the commenters' view.
    For similar reasons, we disagree with the commenter that suggested 
that the Supreme Court's decision in Bethesda controls in this 
situation. As discussed more fully in section II.C. of this final rule, 
the Bethesda decision involved a challenge to the Board's decision that 
it did not have jurisdiction to consider a cost that was not claimed on 
the provider's cost report, and did not in any way deal with the 
question of the timeliness of adding issues to a hearing request. We 
believe that Maine General Medical Center v. Shalala, 205 F.3d 493 (1st 
Cir. 2000), also discussed in section II.C. of this final rule, is more 
relevant. In Maine General, the court held that the statute did not 
deprive the Board of jurisdiction to hear a claim involving a

[[Page 30204]]

cost omitted from a cost report (a conclusion with which we strongly 
disagree), but it agreed that ``it would be entirely permissible for 
the Board to conclude, as a matter of policy, not to hear [such a] 
claim.'' (Maine General, at 501.) The court continued: ``All we hold is 
that Congress did not, in the statute, require the Board to reach this 
result by stripping it of jurisdiction. This outcome preserves some 
flexibility for the agency, which may be exactly what Congress 
intended. It is not our job to exercise that flexibility for the 
agency.'' (Id.) Similarly, whereas we agree that the statute does not 
have to be interpreted as preventing the Board from hearing an appeal 
of an issue that was added subsequent to the submission of the request 
for hearing, we believe that we retain the authority to prescribe 
explicitly by regulation the Board's authority to hear issues that were 
not contained in the request for hearing.
    Comment: Several commenters suggested that a deadline for adding 
issues should be directly related to the imminence of the Board 
hearing. For example, the deadline should be set with the filing of 
position papers or tied to a reasonable period prior to the scheduled 
hearing date, such as 60 or 90 days.
    Response: We considered, but ultimately declined to adopt, the 
approach of requiring that issues be added no later than a set period 
(for example, 60 or 90 days) prior to the scheduled hearing date. We 
rejected this approach as potentially unworkable because adding an 
issue (or multiple issues) even months prior to a scheduled hearing 
could delay the hearing and interfere with the Board's ability to 
schedule hearings in a predictable manner.
    Comment: One commenter stated that the time in which an issue may 
be added is solely within the Board's purview. Another commenter 
suggested that the ability to add issues could be waived by agreement 
of both the provider and the intermediary.
    Response: We disagree with the commenter that suggested that the 
time for which an issue may be added is (or should be) solely within 
the Board's purview. Section 1878(e) of the Act gives the Board full 
power and authority to prescribe rules, to the extent not inconsistent 
with the regulations of the Secretary. Here, we believe that it is 
appropriate to regulate the time period for adding issues, rather than 
allowing the Board to prescribe by rule or determine on a case-by-case 
basis the time in which to add an issue. The Secretary, not only the 
Board, has an interest in ensuring that the appeals process is 
conducted in an efficient manner. The Secretary also has an interest in 
gauging at any particular time the Medicare program's potential 
liabilities due to administrative and judicial appeals, which is made 
much more difficult if issues may be added at any time, or at some 
point in time later than the period we proposed. We also believe that, 
if the Board had the authority to prescribe or to extend, on a case-by-
case basis, the time for adding an issue, it could be besieged by 
requests and objections thereto by the parties. Because we disagree 
that the Board should have the discretion to prescribe or extend the 
time for adding an issue, it follows that we also disagree with the 
commenter that suggested that the timeframe for adding issues could be 
waived if both the provider and the intermediary agreed to do so. Any 
process in which the parties could waive the time period for adding 
issues, without the consent of the Board, is inherently undesirable, as 
it would have the potential to interfere with the Board's ability to 
effectively manage its caseload.
    Comment: Two commenters suggested that CMS has not furnished any 
evidence of a cause and effect relationship between the large backlog 
of cases before the Board and the addition of issues to pending 
appeals. Another commenter suggested that a comprehensive analysis of 
the reasons for the large case backlog should be undertaken. Other 
commenters suggested that our proposal was unnecessary because steps 
already taken by CMS have significantly reduced the backlog at the 
Board.
    Response: We do not believe that we are required to quantify a 
cause and effect relationship between the backlog of cases and the 
addition of issues to a pending appeal, nor is it incumbent upon us to 
undergo a comprehensive analysis of the reasons for the large backlog 
at the Board. We believe the Secretary, under sections 1102(a) and 
1871(a) of the Act, has the statutory authority to issue regulations 
for the efficient administration of the Medicare program. The Board's 
experience with the adding of issues and the resulting increase in the 
complexity of cases and the delays in cases because of the need to 
reschedule hearings has convinced us that the proposal is necessary. We 
also disagree that the proposal is unnecessary because of other 
measures that have been taken. At the present time there are 
approximately 6,800 cases pending before the Board. Irrespective of 
other measures that may have reduced the backlog, the present number of 
pending cases is still unacceptable, and can be reduced, or at least 
better controlled, with this deadline to add issues.
    Comment: One commenter suggested that providers should have the 
right to add to pending appeals an issue arising from a change or 
clarification in the law. Because intermediaries are prohibited from 
conducting a reopening based on a change in the law, adding an issue to 
the appeal is the only available means by which a provider may 
vindicate its legal rights. Another commenter suggested that a provider 
should be given a full year after it receives the NPR to evaluate 
potential issues, and noted that a 1-year timeframe is considerably 
less than the 3-year timeframe in which an NPR can be reopened. Another 
commenter suggested that, just as CMS seeks to limit a provider from 
adding issues beyond 60 days from the expiration of the 180-day appeal 
period, CMS should also limit an intermediary's right to reopen and 
revise an NPR beyond 60 days from the issuance of the NPR.
    Response: We disagree that because intermediaries are prohibited 
from conducting a reopening based on a change in law, adding an issue 
to the appeal is the only means by which a provider may vindicate its 
legal rights. A provider may vindicate its legal rights by bringing a 
timely appeal from an NPR and identifying in its request for hearing 
all issues it wishes to appeal, or by adding any issue within 60 days 
after the 180-day period for requesting a hearing. As noted above, a 
provider thus has approximately 2 years after filing its cost report to 
identify all issues it wishes to bring to the Board.
    We disagree with the commenter that suggested that the timeframe 
for adding issues should be at least a year after it receives the NPR. 
We also disagree with the commenter that suggested that, if the time to 
add issues is limited, an intermediary's ability to reopen a previous 
determination should be similarly limited. As explained above, we 
believe 240 days after receipt of an NPR is a reasonable time to 
identify all issues the provider wants to appeal. We also note that the 
time period for requesting a reopening does not need to correlate to 
the time period for appealing an issue because the reopening and 
appeals procedures are separate and distinct. Unlike the effect of 
allowing an inordinate amount of time to add an issue, the time period 
for requesting a reopening does not directly impact upon the Board's 
ability to effectively manage its caseload. Also, the appeals process 
is mandated by statute, and is designed to give

[[Page 30205]]

providers the right to contest matters before the Board (assuming that 
the timely filing, amount in controversy and other requirements are 
satisfied). In contrast, the reopening process is a creature of the 
regulations, allowing an intermediary, through the exercise of its 
discretion (or upon direction from CMS), to reopen and potentially 
revise matters covered by a cost report for which, in most cases, the 
time for appealing the matters at issue has expired. Thus, although 
there is a lengthy period to request a reopening, there is no right to 
a reopening.
    Comment: A few commenters also requested a technical clarification 
concerning the end of the proposed timeframe for adding issues; that 
is, whether the end of the period is 60 days from the date the provider 
files an appeal, or 60 days from the end of the 180-day period during 
which the provider may file an appeal.
    Response: We proposed that providers could add issues to their 
hearing requests no later than 60 days beyond the expiration of the 
180-day filing period for requesting a Board hearing (or intermediary 
hearing, as applicable). After careful consideration of all comments 
received, we continue to believe this policy is fair and strikes an 
equitable balance for the parties to the hearing and the Board.
    Comment: Several commenters suggested that by limiting the 
timeframe for adding issues, providers would be forced to appeal 
everything and then weed out issues later, as appropriate, causing even 
further delays in settling hearings.
    Response: We expect that providers will not file frivolous claims. 
Also, as we stated above, we believe that our proposal provides ample 
time for providers to identify all issues they wish to appeal. 
Moreover, the final rule also requires a provider to submit to the 
Board with its hearing request an explanation for each specific item at 
issue with the reasons that the provider believes Medicare payment is 
incorrect, and how and why Medicare payment must be determined 
differently. This latter requirement should effectively deter any 
provider from disputing every item on the cost report simply to protect 
itself on appeal.
    Comment: One commenter noted that a provider might not have the 
necessary information from the intermediary to meet the proposed 
deadline for adding issues. For example, it can take several months for 
providers to obtain the intermediary's audit work papers needed to 
determine the merits of a new issue. Two commenters suggested that CMS 
could provide the Board with the authority to extend the deadline for 
adding issues when it deems an extension to be appropriate.
    Response: We would expect that an intermediary will promptly 
provide its work papers to a provider upon request. If, however, the 
intermediary has not timely provided documentation to support an 
adjustment, and the provider is dissatisfied with the determination, 
the provider must add the issue to its hearing request prior to the 60-
day deadline in order to preserve its appeal rights. If, upon receipt 
of the work papers, the provider is satisfied that the adjustment is 
correct, the provider should withdraw that issue from the appeal. For 
the reasons stated above, we are not providing the Board with the 
authority to extend the deadline for adding issues.
    Comment: One commenter suggested that the current policy of adding 
issues until the hearing is held should continue because providers 
would have no other reliable recourse to correct errors found in the 
cost report. This commenter stated that intermediaries were abusing 
their discretion by refusing to reopen and revise cost reports for 
clear and obvious errors within 3 years of the issuance of the NPR.
    Response: We disagree with the suggestion that providers should be 
able to add issues until the commencement of the hearing because 
intermediaries have allegedly abused their discretion in refusing to 
reopen and revise cost reports. Providers are responsible for 
identifying all issues that they wish to appeal. Under our proposal, 
which we are finalizing, providers have ample time to identify all 
issues they wish to bring before the Board. As stated in an earlier 
response, the appeals process is different from the reopening process. 
If intermediaries are allegedly improperly refusing to reopen cost 
reports, the remedy does not lie with an adjustment to the appeals 
process. CMS would have to investigate the allegations, determine if 
the allegations are in fact supportable, and if so, take appropriate 
action against the intermediary.

E. Provider Requests for Good Cause Extension of Time Period for 
Requesting Hearing (Sec.  405.1813 and Sec.  405.1836)

    Under current rules, a provider may request an intermediary hearing 
officer or the Board to extend ``for good cause shown'' the 180-day 
period for requesting a hearing. The request must be filed within 3 
years of the date of the original NPR. In the proposed rule, we cited a 
split among the Federal circuit courts of appeals on the basic 
authority of the Board to extend the 180-day period. In response to the 
case law and the case backlog at the Board, we proposed retaining this 
policy, with certain modifications. We believed that, in many 
instances, the current 3-year period for requesting an extension was 
unreasonably lengthy and could result in an increase in the Board's 
backlog of cases. As a result, we proposed allowing providers a shorter 
period in which to file for a hearing beyond the normal 180 days, and 
only in limited specialized circumstances. Thus, the appeals period 
could be extended ``for good cause'' only in cases where a provider 
could establish that it could not reasonably have been expected to 
submit a hearing request within the 180-day period due to extraordinary 
circumstances beyond its control. Also, the request could be made only 
if it was submitted within a reasonable time after the expiration of 
the 180-day period, and in no event would a request be honored if it 
was made more than 3 years after the date of the NPR or other 
determination that the provider wished to appeal. This 3-year outside 
limit for requesting extension represents the same timeframe that 
existed in the previous regulations at Sec.  405.1841(b).
    We also proposed that the Board or other reviewing entity would be 
prohibited from granting a ``good cause'' extension request if the 
provider attempted to rely on a change in the law, regulations, CMS 
Rulings, CMS instructions, or other Federal legal provisions as the 
basis for the extension request. In addition, we proposed that a 
decision by the Board or other reviewing entity to grant or deny an 
extension would be reviewable by CMS but would not be subject to 
judicial review.
    We are adopting our proposals. We have made a technical change to 
proposed Sec.  405.1813(e)(1) concerning the component within CMS to 
which intermediary hearing officer decisions should be sent. As the CMS 
Office of Hearings neither currently receives nor reviews such 
decisions, we changed this provision to indicate only that an 
intermediary hearing officer decision should be sent to CMS (currently, 
the decisions are received by the Center for Medicare Management, a 
component within CMS).
    As Sec.  405.1813 and Sec.  405.1836 are virtually identical in 
their treatment of good cause extension requests for intermediary and 
Board hearings respectively, we have made minor, non-substantive 
wording changes to make these sections consistent, wherever possible.
    Comment: Several commenters were concerned about the proposed lack 
of

[[Page 30206]]

judicial review of a decision by the Board to grant or deny an 
extension request. One of these commenters asserted that, because the 
Board would be prohibited from granting an extension request due to a 
change in the law or regulations, our proposal constituted a ``pre-
emptive strike'' at precluding judicial review of an issue that 
challenged a provision of the law or the regulations. Another commenter 
suggested that a decision by the Board denying a requested extension 
constituted a final determination and should therefore be subject to 
judicial review in the same manner that a Board's decision finding that 
a provider lacked jurisdiction constituted an appealable final 
determination.
    Response: After a careful review of all of the comments received 
regarding provider requests for extension, we have decided to finalize 
our policy as proposed. Our longstanding policy has permitted 
extensions of the timeframe for requesting hearings only in limited 
circumstances, and that concept has been carried forward in the final 
rule. Thus, we have retained a procedure whereby a provider will have 
the opportunity to request an extension for filing an appeal with the 
Board, even after the 180-day statutory period for requesting appeal 
has expired. Moreover, even though we will require that the extension 
request be made within a reasonable time in all cases, we are retaining 
the current outside limit of 3 years after the date of the intermediary 
determination or other determination that the provider wishes to 
appeal.
    With regard to the lack of judicial review following a decision by 
the Board to grant or deny an extension request, we believe that the 
Supreme Court's decision in Your Home Visiting Nurse Services, Inc. v. 
Shalala, 525 U.S. 449 (1999), is informative. In that decision, the 
Supreme Court ruled that an intermediary's declination to reopen upon 
request a determination was not subject to further review, either 
administratively or by a court. It is important to note that Medicare 
rules also prohibit an intermediary from reopening a determination at a 
provider's request when there is a change in the law or regulations. 
Just as the reopening of intermediary determinations are governed 
solely by regulations, so too are decisions made by the Board as to 
whether an extension request should be granted or denied. Therefore, 
under sections 1102(a) and 1871(a) of the Act, which give the Secretary 
authority to issue regulations for the efficient administration of the 
Medicare program, we believe we are authorized to provide for 
discretionary grants and denials of requests to extend the time for 
requesting a hearing, and to further provide that these discretionary 
actions are not reviewable by the courts.
    We disagree with the commenter that suggested that, because the 
Board would not be permitted to grant an extension request on the basis 
that a change in the law or regulations occurred, judicial review of a 
challenge to a law or regulation would be precluded. Providers are 
responsible for identifying, at the time of their hearing request or 
within 60 days following the expiration of the 180-day appeal period, 
all issues they want to appeal. We also disagree with the commenter 
that suggested that a decision by the Board denying an extension 
request should be treated as a final determination, similar to a final 
appealable determination by the Board finding that the Board lacked 
jurisdiction. There is an important distinction between these two types 
of Board decisions. In the first instance, when the Board denies an 
extension request that alleged good cause, the provider has 
acknowledged that it failed to meet the statutory 180-day timeframe for 
requesting an appeal. Therefore, the provider has lost any statutory 
right to appeal in this situation. In contrast, in a case where the 
Board issues a decision that it lacks jurisdiction, and dismisses the 
appeal, the provider does not necessarily concede that it has failed to 
file a timely appeal or that the Board lacks jurisdiction for some 
other reason. Therefore, where a provider does not agree that the Board 
lacked jurisdiction pursuant to the statute, it is entitled to bring an 
appeal to the Administrator and, if applicable, to Federal district 
court in order to resolve the issue.
    Comment: One commenter suggested that CMS failed to provide 
sufficient reasons for the removal of the 3-year timeframe, replacing 
it with an ambiguous ``reasonable time'' standard. The commenter 
believed the 3-year period should be retained and, in the event that it 
is not retained, suggested that the Board be given discretion to 
determine whether an extension request was made within a reasonable 
timeframe. The commenter also suggested that there is nothing in the 
proposed rule that supports prohibiting the reliance on a change in the 
law or regulations as a reason for finding that ``good cause'' exists. 
Another commenter questioned the phrase ``reasonable time'' and wanted 
to know how ``reasonable time'' could be viewed as equaling ``no more 
than three years after the date of the intermediary determination.''
    Response: As noted in the proposed rule, we considered eliminating 
altogether good cause extensions of the 180-day period for requesting a 
hearing. We proposed retaining good cause extensions to allow providers 
to submit hearing requests beyond the 180-day limit only in 
extraordinary circumstances beyond their control (for example, fire, 
catastrophe or strike) that existed prior to the expiration of the 180-
day appeal period. We believe it is fair and appropriate that, absent 
extraordinary circumstances, providers should be expected to file their 
appeals within the 180-day period. Specifically, providers that are 
dissatisfied with a final determination should file a timely appeal, 
rather than depend on a right to file late if there is a favorable 
change in the law at some point after the 180-day appeal period.
    We also believe that setting a reasonable time, not to exceed 3 
years, for filing a late appeal is appropriate. Again, given that the 
circumstances giving rise to the claim of good cause for a late filing 
must exist prior to the expiration of the 180-day appeal period, the 
purpose of the reasonable time requirement is to allow the provider a 
sufficient time to recover from the unseen event and gather the 
necessary records, and make the necessary preparations for filing an 
appeal. The purpose is not to allow the provider to file a late appeal 
based on a favorable change in law or other circumstances that could 
arise after the expiration of the 180-day period. We decline to set a 
definite period, and instead believe that what constitutes a reasonable 
time for filing an appeal beyond the timely filing limit should be left 
to the Board's discretion (subject to the outside limit of 3 years) 
based on the particular facts before it. Moreover, because a provider 
must file a claim under protest to preserve its right to appeal a claim 
when the provider seeks reimbursement for an amount that may not be 
allowable under the controlling law, regulations, or policy, we do not 
consider a subsequent change in the law, regulations, or policy as 
falling within the ``good cause'' exception.
    Comment: Three commenters suggested that CMS has too much 
involvement in the Board's decision-making process. One of the 
commenters suggested that the Administrator's ability to review the 
Board's decision to grant or deny a good cause extension request was an 
example of CMS's intention to gain total oversight over the Board. 
Another commenter believed that CMS was attempting to usurp the Board's 
discretion in determining whether there was good cause to grant an 
extension. The commenter suggested that only the Board is authorized to

[[Page 30207]]

establish the procedures and limitations governing its own independent 
review of provider appeals. The other commenter suggested that CMS 
should provide for extensions in circumstances where either CMS 
employees or appeals personnel contributed to the delays in filing a 
timely appeal (for example, unreasonable delays in responding to 
written inquiries).
    Response: We disagree with the suggestion that we are overly 
involved in the Board's decision-making process. Again, we rely upon 
sections 1102(a) and 1871(a) of the Act, which grant the Secretary the 
necessary authority to issue regulations for the efficient 
administration of the Medicare program. It is our view that the parties 
to a Board hearing may avail themselves of Administrator review 
following a decision rendered by the Board. That particular policy has 
never varied throughout the existence of the Board. The Board is 
independent of CMS and, as an independent body, issues decisions 
outside of the realm of CMS influence. Section 1878(f)(1) of the Act 
authorizes the Secretary (delegated to the Administrator of CMS) to 
reverse, affirm, or modify a decision made by the Board. A decision 
rendered by the Board to grant or deny a provider a good cause 
extension request is merely another example of the myriad decisions 
handed down by the Board that are subject to review by the 
Administrator.
    A provider is required to establish ``good cause'' before the Board 
can allow an extension of the 180-day time limit for filing a hearing 
request. We have not defined all the ``extraordinary circumstances'' 
that the provider can rely upon to satisfy a ``good cause'' extension. 
Therefore, the Board has the discretion to weigh the factual scenarios 
presented by a provider and make its decision accordingly.
    Finally, in the scenario where a provider believes that CMS or 
Board personnel are not responding in a timely fashion to written 
inquiries, in our view, the Board should not grant an extension request 
for ``good cause.'' Instead, the provider would be expected to protect 
its rights by filing a timely appeal within the 180-day period 
prescribed by the Act.

F. Intermediary Hearing Officer Jurisdiction (Sec.  405.1814)

    In the proposed rule, we sought to clarify the scope of an 
intermediary hearing officer's jurisdiction; that is, appeals that have 
amounts in controversy of between $1,000 and $9,999.
    In proposed Sec.  405.1814(a)(1)(ii) (and Sec.  405.1840(a)(2), for 
Board cases), we required the intermediary hearing officer (and the 
Board) to make a preliminary determination of the scope of its 
jurisdiction and notify the parties of its jurisdictional findings, 
before conducting certain proceedings. For clarity, we have amended 
these sections by way of a parenthetical to explain that the 
intermediary hearing officer's (or Board's) preliminary determination 
of the scope of its jurisdiction consists of a review as to whether the 
request for hearing was timely and whether the amount in controversy 
has been met. Also, we removed language from these sections that 
required the intermediary hearing officer (or Board) to ``notify'' the 
parties of such preliminary determination. The latter revision was made 
primarily because, as most Board cases are settled prior to hearing, it 
would be costly and inefficient for the Board to notify the parties of 
preliminary jurisdictional findings. Requiring such notification would 
unnecessarily slow the ultimate resolution of cases.
    For clarity, we also made minor technical changes to other portions 
of Sec.  405.1814, and conformed language in Sec.  405.1814 to that in 
Sec.  405.1840 (concerning the Board's jurisdiction), wherever 
possible.
    Comment: One commenter suggested that if an appeal were initially 
filed as a request for an intermediary hearing, but it was subsequently 
determined that the amount at issue in the appeal had exceeded $10,000, 
the regulations should provide that the appeal must be transferred to 
the Board.
    Response: We agree with the commenter. Our policy is that, when an 
intermediary hearing officer has initially accepted jurisdiction 
because the amount in controversy is between $1,000 and $9,999, any 
change increasing the amount in controversy to at least $10,000 (for 
example, a more accurate estimate of the amount in controversy or the 
adding of an issue) will produce a change in forum; that is, the Board 
will accept jurisdiction. However, where the Board initially accepts 
jurisdiction after determining that a case has at least $10,000 in 
controversy, and that amount is subsequently reduced to a figure below 
$10,000 because one or more of the issues has been settled or 
withdrawn, it is our policy that, notwithstanding the amount in 
controversy falling to a level below $10,000, the Board will continue 
to have jurisdiction and, as a result, may hold a hearing and issue a 
decision. (We have a similar policy regarding the situation in which a 
group appeal initially satisfies the $50,000 jurisdictional threshold 
and subsequently falls below that threshold.) We have added paragraph 
(c)(4) to Sec.  405.1839 to clarify the effect of a change in the 
amount in controversy.

G. CMS Reviewing Official Procedure (Sec.  405.1834)

    In the proposed rule, we sought to codify the procedures currently 
located in section 2917 of the PRM for the CMS review of intermediary 
hearings. The proposed rule stated that the provider, by submitting a 
proper request, would be entitled to review of the intermediary hearing 
officer(s) decision, and also proposed that the Administrator would 
have discretionary, ``own motion'' review authority. In proposed Sec.  
405.1834(d)(2), we stated that the Administrator, through the CMS 
reviewing official, may exercise his or her discretionary authority to 
review an intermediary hearing officer decision by accepting review 
within 60 days after receipt of the decision by CMS's Office of 
Hearings. We received one comment on this proposal, which is discussed 
below.
    We are making the following changes. First, we have revised the 
regulation text at Sec.  405.1834(d)(2) to provide that the 60-day 
period for noticing own motion review begins from the date of the 
intermediary hearing officer decision. In Sec.  405.1834(e)(2), we are 
clarifying the proposal that the CMS reviewing official's review of an 
intermediary hearing officer decision would not be limited to a hearing 
on the written record if certain criteria are met, including that the 
CMS reviewing official determines that holding the hearing is 
preferable, in the interest of administrative efficiency, to remanding 
the matter to the intermediary. For clarity, in Sec.  
405.1834(e)(2)(iii), we are replacing the language ``the matter must 
not be remanded'' with ``[i]t is not necessary or appropriate to remand 
the matter to the intermediary hearing officer(s).''
    We have made technical changes to proposed Sec.  405.1834(b) and 
Sec.  405.1834(c), and Sec.  405.1834(e)(3) concerning the component 
within CMS to which intermediary hearing officer/CMS reviewing official 
decisions should be sent. As the CMS Office of Hearings neither 
currently receives nor reviews either of these decisions, we changed 
these provisions to indicate that intermediary hearing decisions should 
be sent to the appropriate CMS component for review by a CMS reviewing 
official. Following the review and issuance of a written decision by a 
CMS reviewing official, the decision is

[[Page 30208]]

then sent to CMS (currently, both intermediary hearing officer 
decisions and CMS reviewing official decisions are received by the 
Center for Medicare Management, a component within CMS).
    We clarified language in Sec.  405.1834(d)(1), pertaining to own 
motion review by the Administrator.
    In Sec.  405.1834(e)(1) we proposed that the CMS reviewing official 
must give great weight to ``other interpretive and procedural rules and 
general statements of policy.'' We revised the quoted language to read 
``other interpretive rules, general statements of policy, and rules of 
agency organization, procedure, or practice established by CMS'' in 
order to be consistent with the language in Sec.  405.1867 regarding 
the authorities to which the Board is not bound but must give great 
weight.
    Comment: One commenter suggested that the proposed provision at 
Sec.  405.1834(d)(2) is inconsistent with other provisions that give 
CMS the right to conduct and complete review within 60 days of the date 
the provider receives the decision. The commenter was also concerned 
that there may be a problem with intermediaries sending decisions to 
the appropriate CMS component at the same time they send them to 
providers.
    Response: We believe that the statutory provision that mandates the 
Administrator both accept review and render a decision within 60 days 
of the provider's receipt of the Board's decision is unusual and not 
the optimal procedure for taking review. We continue to believe it 
would not be appropriate to constrain the CMS reviewing official in 
this manner when taking review of an intermediary hearing officer 
decision. We do not share the commenter's concern that the intermediary 
hearing officers will unduly delay forwarding their decisions to the 
appropriate CMS component. Rather, we believe that intermediary 
officers will promptly forward their decisions to CMS. Moreover, to the 
extent that a provider is concerned that CMS has not promptly received 
an intermediary hearing officer decision, the provider may contact CMS 
to verify its receipt of the decision. Nevertheless, in response to the 
commenter, we are providing a date certain for the onset of the 60-day 
period for the CMS reviewing official to notify the provider and the 
intermediary that he or she is taking own motion review. Therefore, we 
have revised proposed Sec.  405.1834(d)(2) to provide that the 60-day 
period for noticing review begins from the date of the intermediary 
hearing officer decision.

H. Group Appeals (Sec.  405.1837)

    In the proposed rule, we introduced various revisions to clarify 
and update the regulation to reflect longstanding group appeal 
procedures. For example, we provided 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 
also provided that a group appeal must be limited to one legal or 
factual issue that is common to each provider in the group. 
Additionally, we clarified the distinction between mandatory and 
optional uses of group appeal procedures. We also added a new provision 
that specified the requirements for the contents of a request for a 
group appeal. We also clarified existing regulations regarding the 
processing of group appeals pending full formation of the group and 
issuance of a Board decision.
    We are making several changes to the proposed rule, including 
technical and editorial changes.
    We have revised Sec.  405.1837(b)(1) (with respect to mandatory 
group appeals) and Sec.  405.1837(b)(2) (with respect to optional group 
appeals) to provide that one or more of the providers in the group may, 
as a matter of right, appeal more than one cost reporting period with 
respect to the issue that is the subject of the group appeal for 
purposes of meeting the $50,000 amount in controversy requirement, and, 
subject to the Board's discretion, may appeal more than one cost 
reporting period with respect to the issue that is the subject of the 
group appeal for other purposes, such as convenience. We have added 
some examples in the text following Sec.  405.1837(b)(1) in order to 
illustrate the application of--(1) The amount in controversy 
requirement; and (2) the rules on when a provider under common 
ownership may (either as a matter of right or as a matter of Board 
discretion) join a group appeal involving a different cost reporting 
period than that pertaining to the provider, to specific situations. We 
have revised the language in Sec.  405.1837(b)(3) to clarify that 
whereas one or more commonly owned or operated providers may initiate a 
mandatory group appeal (group appeals brought under Sec.  
405.1837(b)(1)), at least two providers are required to initiate an 
optional group appeal (group appeals brought under Sec.  
405.1837(b)(2)).
    In proposed Sec.  405.1837(c)(4), we would have required the 
providers in a group appeal to submit a statement that either--(1) The 
providers believe that they meet all the requirements for a group 
appeal and that the Board can proceed to make jurisdictional findings; 
or (2) the Board ``must defer'' making jurisdictional findings until 
the providers request the Board to do so. Consistent with proposed 
Sec.  405.1837(c)(4)(ii), proposed Sec.  405.1837(d)(4) and Sec.  
405.1837(e)(2) stated that the Board may not make jurisdictional 
findings until the providers request them. After further consideration, 
however, it is our position that, if the Board believes at any point in 
the group appeals process that, for purposes of administrative 
efficiency, it should make jurisdictional findings, it should be 
allowed to do so. Accordingly, we have revised Sec.  405.1837(c)(4)(ii) 
and Sec.  405.1837(e)(2), and have deleted Sec.  405.1837(d)(4).
    Likewise, we believe the Board should not be required to make 
jurisdictional findings before conducting further proceedings in the 
appeal. The Board is in the best position to know whether, in any given 
case, it is administratively efficient and proper to conduct 
proceedings in advance of making jurisdictional findings. Accordingly, 
we have deleted proposed Sec.  405.1837(d)(3).
    We have revised proposed Sec.  405.1837(e) with respect to the 
procedures for determining that a group is fully formed, to be 
consistent with the current regulations and the Board's practice. 
Proposed Sec.  405.1837(e)(2) would have provided that a group would be 
fully formed upon notice from the providers to the Board, but did not 
include a mechanism for determining that the group would be considered 
fully formed absent such a notice. We believe that it is appropriate 
for the Board to retain the abilities both to determine that a group is 
fully formed and that the group appeal should proceed, and to set 
schedules for the closures of groups, rather than being required to 
hold open indefinitely the group formation. Accordingly, we have 
deleted certain language in proposed Sec.  405.1837(e)(2) and have 
revised Sec.  405.1837(e)(1) to provide that with respect to mandatory 
group appeals, absent a notice from the providers that the group is 
fully formed, the Board may issue an order requiring the providers to 
demonstrate that there is at least one commonly-owned or controlled 
provider that is a potential addition to the group. With respect to 
optional group appeals, we have revised Sec.  405.1837(e)(1) to provide 
that, absent a notice from the providers that the group is fully 
formed, the Board will issue an order that the group is fully formed or 
will issue general instructions

[[Page 30209]]

that set forth a schedule for the closing of optional group appeals.
    We have revised Sec.  405.1837(e)(2) to state that the Board will 
not dismiss any group appeal hearing request for failure to meet the 
amount in controversy requirement until the Board has determined that 
the group is fully formed.
    We have deleted language from proposed Sec.  405.1837(e)(5) that 
stated that the Board must grant a request to join a group appeal if 
the request is unopposed by the group members and is received by the 
Board prior to a final decision by the Board on the appeal. Our 
rationale for this revision is that the Board generally should have the 
discretion, for purposes of administrative efficiency, to grant or deny 
a request for joining a group appeal. We note that the Board may modify 
an order that a group has been fully formed, and thus could allow a 
provider to join a group appeal that was originally declared fully 
formed. Note that we have moved the language in proposed Sec.  
405.1837(e)(6), which stated that a denial by the Board of a request to 
join a group is without prejudice to the provider bringing a separate 
appeal, to Sec.  405.1837(e)(4). We have substantially revised the 
language of proposed Sec.  405.1837(e)(7) and also incorporated 
proposed Sec.  405.1837(e)(7) into Sec.  405.1837(e)(4). We proposed 
that, for purposes of determining the timeliness of 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)). We 
have revised this language to state that, for purposes of determining 
timeliness for the filing of any separate appeal and for the adding of 
issues to that appeal, the date of receipt of the provider's request to 
form or join the group appeal is considered the date of receipt for 
purposes of meeting the applicable 180-day period prescribed in Sec.  
405.1835(a)(3). We were concerned that our proposal was potentially 
confusing and could have been disadvantageous for providers that filed 
the request for a group appeal hearing on or near the end of the 
deadline for doing so. For example, under our proposal, a provider that 
filed a request for a Board hearing on a group appeal on the 177th day 
after receiving its intermediary determination, would have only three 
days after the Board denied its request to join the group to file a 
separate appeal. Under our revision, because the provider's request for 
a hearing on the group appeal was timely, its subsequent request for a 
separate hearing also would be timely.
    In response to a comment, in revised Sec.  405.1837(e)(5), we 
provide that, as a general rule, where a provider has appealed an issue 
through electing to form, or join, a group appeal, it may not 
subsequently request the Board to transfer that issue to a single 
provider appeal brought in accordance with Sec.  405.1811 or Sec.  
405.1835. We provide an exception to the general rule in the case of a 
group appeal that does not meet the jurisdictional requirements. Where 
the Board determines that the requirements for a group appeal are not 
met (that is, where there has been a failure to meet the amount in 
controversy or the common issue requirement), it will transfer the 
issue that was the subject of the group appeal to a single provider 
appeal (or appeals) for the provider (or providers) that meets (or 
meet) the requirements for a single provider appeal.
    Comment: A commenter objected to our proposal to clarify that each 
provider in a group appeal must satisfy the requirements for a single 
provider appeal (except for the amount in controversy requirement) as 
interfering with the Board's statutory authority to establish the 
procedural requirements governing provider appeals.
    Response: We believe our proposal is consistent with what is 
required by statute. The statute provides for a different amount in 
controversy requirement for group appeals, but still requires that 
providers appeal from a final determination of an intermediary or the 
Secretary and that the appeal be timely.
    Comment: One commenter stated that it was generally supportive of 
the proposals on group appeals, but sought clarification on a few 
points. This commenter stated that some of the proposals, if adopted, 
would conflict with the Board's current instructions on group appeals. 
Therefore, we should be prepared to immediately revise the Board's 
instructions to avoid confusion.
    Response: To the extent that there is any conflict between the 
provisions of this final rule and the Board's current instructions, the 
former will control. We anticipate that the Board will make revisions 
to its current instructions as a result of the publication of this 
rule.
    Comment: Two commenters stated that they supported the proposal to 
allow groups to aggregate claims across multiple cost reporting periods 
in order to satisfy the $50,000 amount in controversy requirement. One 
of these commenters believed that the proposal is ambiguous as to 
whether items may be combined across cost years only for the purpose of 
meeting the $50,000 amount in controversy requirement. According to the 
commenter, providers should be allowed to combine common issues from 
multiple cost reporting periods, regardless of cost report year end, 
into one group appeal. Because providers have a variety of cost 
reporting periods, and some may even have multiple cost reporting 
periods within one calendar year, there is no reason to require a 
commonality of cost reporting periods as a requirement for a group 
appeal.
    Response: Our proposals for group appeals were made with the view 
that, to the extent we have discretion under the statute, we should 
allow appeals to be brought as group appeals so as to reduce the 
workload on the Board, as well as the burden on providers and 
intermediaries. Our specific proposal to allow providers to combine the 
same item for multiple cost reporting periods into one group appeal was 
made under the section of the proposed rule pertaining to the amount in 
controversy requirements. However, we have further examined the issue 
and believe that providers with different cost reporting periods may, 
subject to the Board's discretion, raise the same issue in a group 
appeal, even when the amount in controversy requirement can be 
satisfied without including all of the multiple cost reporting periods. 
We have amended Sec.  405.1837(b)(1) and Sec.  405.1837(b)(2) 
accordingly.
    Comment: One commenter stated that, whereas it agrees that it is 
proper to transfer an issue from an individual appeal to a group 
appeal, the regulations should specifically state that the amount in 
dispute for a transferred issue is applied, for purposes of the amount 
in controversy requirement, only to the group appeal. For example, the 
commenter stated, if an individual Board appeal had two issues with 
$9,000 in dispute for each issue, and one of the issues was transferred 
to a group appeal, the $9,000 amount in dispute would be applied to the 
group appeal for purposes of meeting (or exceeding) the $50,000 amount 
in controversy requirement, and the single appeal would be left with 
one issue with $9,000 in controversy (in which case the appeal would 
have to be dismissed for not meeting the $10,000 minimum).
    Response: Our longstanding approach regarding meeting the amount in 
controversy requirement for single provider appeals is that, as long as 
the

[[Page 30210]]

provider has met the $10,000 requirement initially, subsequent events 
(including, but not limited to, withdrawal, transfer or settlement of 
an issue) that takes the amount below $10,000 will not deprive the 
Board of jurisdiction. As noted in section II.I. of this final rule, we 
are amending Sec.  405.1839(c)(4) to provide specifically that, where a 
provider or group of providers has requested a hearing before the Board 
pursuant to Sec.  405.1835 or Sec.  405.1837, and the amount in 
controversy changes to an amount less than the minimum for a Board 
appeal due to the settlement or partial settlement of an issue, 
transfer of an issue to a group appeal, or the abandonment of an issue 
in an individual appeal, the change in the amount in controversy does 
not deprive the Board of jurisdiction.
    Comment: One commenter noted that proposed Sec.  405.1837(b)(1) 
states that 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. The commenter asked whether this meant that providers 
under common ownership or control cannot appeal an issue at all if the 
combined amount in controversy does not meet the $50,000 threshold for 
a group appeal.
    Response: We believe that the language of section 1878(f)(1) of the 
Act, which requires that any appeal to the Board by providers that are 
under common ownership or control be brought as a group appeal, can 
reasonably be read to mean that any appeal by commonly owned or 
controlled providers that could be brought as a group appeal must be 
brought as a group appeal. Therefore, if there are, for example, three 
commonly owned providers that wish to appeal the same issue, but the 
amount in controversy is $10,000 for each (so that the $50,000 amount 
in controversy requirement for group appeals would not be met), each of 
the three providers could bring an individual appeal. We have clarified 
the language in Sec.  405.1837(b)(1) for this purpose.
    Comment: One commenter asked whether a provider may add an issue to 
a group appeal when the provider has appealed one issue of an original 
NPR, joined a group appeal, and is within the 60-day proposed time 
limit to add an issue, but is beyond 180-days from the original NPR.
    Response: We understand the commenter to be asking whether a 
provider, having appealed only issue A in an individual appeal, can 
join a group appeal that involves issue B. The answer depends on 
whether the provider first (or concurrently) requests the Board to add 
issue B to its individual appeal and meets the requirements for adding 
the issue to its individual appeal. Under Sec.  405.1835(c) of this 
final rule, a provider may add an issue to its individual appeal if its 
request to do so meets certain requirements, including the requirement 
that the Board receive the request no later than 60 days after the 
expiration of the applicable 180-day appeal period prescribed in Sec.  
405.1835(a)(3). If the provider requests and meets the requirements for 
adding an issue to its individual appeal, it may also request, under 
Sec.  405.1837(b)(3)(ii), that, upon addition of the issue to the 
individual appeal, the issue be transferred from the individual appeal 
to the group appeal. If the provider is beyond the time for adding an 
issue to its individual appeal, it may not circumvent the time limit 
for doing so by seeking to appeal that issue through joining a group 
appeal.
    Comment: One commenter noted that, under current Board 
instructions, a group appeal may be initiated only by two or more 
providers, but because of varying fiscal year ends and varying dates of 
NPRs, an appeal on a common issue for one provider may be due to be 
filed before the time is ripe for other providers to join in the group. 
Therefore, this commenter supports the proposal to allow a group appeal 
to be initiated by a single provider, with other providers joining 
later.
    Response: We are clarifying that, although a single provider may 
initiate a mandatory group appeal, two or more providers are required 
to initially file an appeal for optional groups pursuant to Sec.  
405.1837(b)(3). Our policy for optional group appeals is based upon 
administrative efficiency concerns. Fundamentally, by definition, a 
group appeal must ultimately contain two or more providers. 
Accordingly, without the requirement to meet this definition from the 
onset of filing an appeal, the Board would be forced to entertain an 
abundance of requests to transfer to (or create) an individual appeal 
from single providers who filed a group appeal, but failed to join with 
another provider before the group closing deadline. We recognize, 
however, that due to the statutory requirement that providers under 
common ownership or control must appeal common issues as a group, 
combined with the fact that these providers may receive their final 
determinations on a staggered basis, we will allow, pursuant to Sec.  
405.1837(b)(3), a single provider that anticipates that a commonly 
owned or controlled provider will have an identical issue under appeal, 
to initiate a mandatory group appeal, despite the administrative 
efficiency concern above. In the unlikely event that no other providers 
ultimately appeal the issue, the Board will either transfer the group 
appeal issue to an existing individual appeal, administratively convert 
the group case number to an individual case number, or administratively 
create a new individual case number for the issue if the jurisdictional 
requirements of Sec.  405.1811 or Sec.  405.1835 are met.
    Comment: One commenter believed that the current policy permitting 
hospitals to file individual appeals and to subsequently transfer 
common issues to group appeals should be retained. Providers under 
common ownership should not be precluded from pursuing a common issue 
in a group appeal if they initially appealed it in an individual 
appeal. This would allow hospitals time to determine whether an issue 
is common to other hospitals under common ownership, which is not 
always evident when one hospital receives a particular adjustment. 
Similarly, another commenter stated that it is not practical for a 
commonly owned provider to be required to file the initial appeal 
request as a group appeal. Not all commonly owned hospitals are 
centralized or situated in a way that enables them to coordinate 
initial appeals as a group appeal within the 180-day deadline for 
seeking a hearing. This commenter suggested that, instead, we could 
require consolidation of single appeals into a group appeal within a 
certain time after the single appeals have been filed. The commenter 
also suggested that providers could be required to list their parent 
corporation at the time of filing a single appeal to assist the Board 
in identifying providers under common ownership.
    Response: We believe it is reasonable to expect that the parent 
corporation of commonly owned or controlled providers has a mechanism 
in place to identify issues that are common to more than one provider 
and to coordinate any appeals of these issues. Further, we believe that 
the parent corporation is in a better position than the Board to 
identify commonly-owned providers. Therefore, we are requiring a 
commonly owned provider to bring a timely appeal, as--(1) A group 
appeal (either initiating it or joining it) for an issue that is shared 
by other provider(s) to which it is related by common ownership; or (2) 
a single provider appeal for an issue that is peculiar to itself. (By 
``timely'' we mean an appeal that satisfies the time limits stated in 
Sec.  405.1835(a)(3) and Sec.  405.1835(c).) Where a commonly owned or 
controlled provider mistakenly files an issue

[[Page 30211]]

within a single provider appeal that should have been brought as a 
group appeal, the Board will transfer the issue to an existing group 
appeal (or, where applicable, the Board will form a group appeal by 
transferring the same issue that was filed by two or more commonly 
owned or controlled providers within single provider appeals). We 
believe, however, that where a provider has brought a single provider 
appeal and then wishes to join (or form) a group appeal involving 
providers to which it is not related, the Board should retain 
discretion as to whether to deny the provider's request. In order to 
assist the Board in identifying individual appeals that should have 
been brought as group appeals (or should have been joined to an 
existing group appeal), we are amending Sec.  405.1835 to add a new 
paragraph (b)(4) to require a commonly owned provider to provide the 
Board with certain information. Specifically, a commonly owned provider 
must list the name of its parent corporation, and either state that, to 
the best of its knowledge, no other provider related to it by common 
ownership or control has an individual or group appeal pending before 
the Board on the same issue for a cost reporting period that falls 
within the same calendar year. Alternatively, when an appeal already 
exists, the provider must give information (for example, the provider 
name and number) concerning that appeal.
    Comment: One commenter stated that, when a group appeal is 
instituted by one of a small number of hospitals, there may be 
uncertainty as to whether similar adjustments will be received by one 
or more of the remaining hospitals. Thus, the final rule should specify 
that the issue appealed in a group appeal may be redesignated into an 
individual appeal (or appeals) where an insufficient number of 
hospitals receives common audit adjustments to meet the $50,000 amount 
in controversy requirement. Similarly, another commenter recommended 
that we allow providers under common ownership or control to change an 
appeal that was originally brought as a group appeal to an individual 
appeal under certain circumstances. The commenter gave the following 
example: Providers A and B are the two members of a chain organization 
and have a common legal or factual issue. Provider A receives an 
adjustment from its intermediary on the legal or factual issue and, 
consistent with existing policy, files a group appeal before all other 
commonly owned providers (here, Provider B) have received their NPRs. 
Provider B then receives its NPR from its intermediary, but the 
intermediary does not make an adjustment on the same legal or factual 
issue. In this case, the case cannot proceed as a group appeal. The 
commenter gave as other examples the situations in which two providers 
have the same issue, but do not meet the amount in controversy 
requirement, or when one of the providers has failed to timely appeal.
    Response: In regard to the situation in which only one provider, in 
an organization of commonly owned or controlled providers, has received 
an adjustment on a particular item, we do not believe that there is 
``an issue common to such providers.'' Therefore, the case can proceed 
as a single provider appeal (provided that the jurisdictional 
requirements for a single appeal are met). Similarly, where providers 
timely bring a group appeal, but fail to meet the $50,000 amount in 
controversy requirement, the Board will restructure the group appeal as 
separate single provider appeals for those providers that meet the 
$10,000 amount in controversy requirement for single provider appeals. 
We emphasize, however, that, where a group appeal is redesignated as 
one or more single provider appeals, the time in which to add issues is 
unaffected. That is, under Sec.  405.1835(c)(3) as finalized, the Board 
must receive a request to add an issue no later than 60 days after the 
expiration of the 180-day period specified in Sec.  405.1835(a)(3) for 
bringing the appeal. Thus, if a provider brings an appeal involving 
issue A as a group appeal, on the last day of the 180-day period, and 
more than 60 days later the group appeal is redesignated as one or more 
single provider appeals, the provider would not be able to add issue B 
to its single provider appeal. If, on the other hand, the provider 
brings a group appeal as to issue A on the 150th day of the 180-day 
period, and the group appeal is redesignated as a single provider 
appeal 60 days later, the provider would have an additional 30 days to 
add issue B to its single provider appeal, as it would have until 60 
days after the expiration of the 180-day period to add the issue. We 
note that, as revised, Sec.  405.1837(e)(4) states that, for purposes 
of determining timeliness for the filing of any separate appeal and for 
the adding of issues to that appeal, the date of receipt of the 
provider's request to form or join the group appeal is considered the 
date of receipt for purposes of meeting the applicable 180-day period 
prescribed in Sec.  405.1835(a)(3). We were concerned that our proposal 
could have been disadvantageous for providers that filed the request 
for a group appeal hearing on or near the end of the deadline for doing 
so. For example, under our proposal, a provider that filed a request 
for a Board hearing on a group appeal on the 177th day after receiving 
its intermediary determination, would have only three days after the 
Board denied its request to join the group to file a separate appeal. 
Under our revision, because the provider's request for a hearing on the 
group appeal was timely, its subsequent request for a separate hearing 
also would be timely. Accordingly, the provider's request to add issues 
to a subsequent individual appeal is 60 days beyond the applicable 180-
day period prescribed in Sec.  405.1835(a)(3) (regardless of when the 
subsequent separate appeal was created).
    Comment: One commenter stated that if an issue is transferred to a 
group appeal, it should not be transferred back to a single appeal. 
According to the commenter, when providers transfer an issue to a group 
appeal and then back to a single appeal, it creates an unnecessary 
administrative burden for the intermediary and the Board. Also, many 
providers transfer issues back and forth as a way to hold the issue 
open until they have accumulated the necessary data.
    Response: We agree with the commenter's concern. Accordingly, Sec.  
405.1837(e)(5) provides that, apart from the situation where the 
requirements for a group appeal are not met (that is, where there has 
been a failure to meet the amount in controversy requirement or the 
common issue requirement), a provider may not transfer an issue from a 
group appeal to a single provider appeal. In the situation where a 
provider has elected to form or join a group appeal, and the 
requirements for a group appeal ultimately are not met, the Board will 
transfer the provider's appeal to an individual appeal.
    Comment: One commenter noted that proposed Sec.  405.1837(b)(1) 
requires commonly owned or operated providers to bring as a group 
appeal ``a specific matter at issue that involves a question of fact or 
interpretation of law, regulations, or CMS rulings that is common to 
providers * * *'' The commenter believes that the proposed regulations 
should be clarified, because they do not impose a timeframe for common 
issues among commonly-owned providers that must be brought in group 
appeals. As drafted, all provider appeals of common issues that were 
repeated year after year would have to be combined in one group. This 
would make the groups unworkable in

[[Page 30212]]

terms of size and organization, and they would not be able to close 
their groups when the same issue repeated itself in new fiscal years. 
Therefore, the final rule should specify that all common issue appeals 
for fiscal years ending in the same calendar year be included in one 
group.
    Response: We are amending Sec.  405.1837(b)(1) to clarify that 
commonly owned or operated providers must bring as a group appeal a 
specific matter at issue that involves a question of fact or 
interpretation of law, regulations, or CMS rulings that is common to 
providers and that pertains to cost reporting periods ending in the 
same calendar year.
    Comment: One commenter noted that proposed Sec.  405.1837(c)(3) 
would require providers to submit ``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 * 
* *'' The commenter sought clarification as to exactly what documents 
would need to be submitted with the group appeal request. Also, it is 
not clear what the proposed regulation means by ``any other documentary 
evidence the providers consider necessary to satisfy the hearing 
request requirements.'' It is unclear what other documentation is 
needed.
    Response: We are clarifying that, when referring to ``intermediary 
determination,'' we do not intend to require that the entire NPR be 
submitted with the group appeal. It is only necessary to submit the 
first page of the NPR, showing the date of issuance, along with the 
page containing the adjusted amount or protested item in dispute. At a 
minimum, to satisfy the documentation requirements of Sec.  
405.1837(c)(3), it is necessary to submit the first page of the final 
determination (for example, the NPR), showing the date of issuance, 
together with the pages containing the adjusted amounts or protested 
items in dispute. Providers should also submit any additional 
documentation that they consider necessary to satisfy the requirements 
for obtaining a group appeal.
    Comment: One commenter stated that filing a Schedule of Providers 
with supporting documentation can be a costly endeavor. This commenter 
recommended that any rule change that affects group appeals be 
prospective, that is, any pending group appeals should be excepted to 
avoid unnecessary administrative filings and potential jurisdictional 
challenges for otherwise properly pending cases.
    Response: We believe that the filing of a consolidated Schedule of 
Providers with supporting documentation (which is already required by 
the Board in its current instructions) is necessary; otherwise, the 
intermediary, the Board, the Administrator, and the courts could be 
required to review piecemeal jurisdictional documentation. We note 
further that the current process, which requires providers to submit 
the Schedule to the intermediary, which, in turn forwards the Schedule 
to the Board (with comments either challenging or agreeing to the 
existence of jurisdiction), appears to be working efficiently. 
Accordingly, we are adopting the proposal without change.
    Comment: A commenter stated that sometimes there is more than one 
disputed fact or question of law pertaining to a single item on the 
cost report. A common example of this is the disproportionate share 
hospital (DSH) adjustment, which is determined by a combination of 
calculations, each of which may have more than one element in dispute. 
According to the commenter, the Board should have the authority to 
handle more than one question of fact or law in a group appeal if that 
would lead to a more efficient resolution. Further, even if the Board 
wished to split sub issues into separate groups pursuant to proposed 
Sec.  405.1837(f)(2)(ii), we should clarify that a provider may 
initiate a single group appeal for a single line item in dispute.
    Response: The statute requires that a group appeal involve only a 
common question (singular) of fact or interpretation of law or 
regulations. The regulations at Sec.  405.1837(a)(2) further specify 
that a group appeal involve a single question of fact or interpretation 
of law, regulations, or CMS Rulings that is common to each provider in 
the group. What constitutes an appropriate group appeal issue in a 
given case will be determined by the Board.
    Comment: One commenter stated that the present requirement that a 
group appeal be closed within 12 months is unworkable. For groups 
involving commonly owned providers, the issuance of NPRs for some 
would-be members of the group can lag behind substantially the NPRs of 
those already in the group. Therefore, the commenter was supportive of 
the proposed change that would allow a group to remain open until the 
provider notifies the Board that the group is complete. The commenter 
requested, however, that, if the proposal is finalized, we should make 
clear that the Board's current instructions, that is, those that 
mandate the closure of all groups by certain deadlines and the creation 
of a ``schedule B'' for any would-be members of a group of commonly 
owned providers that do not have their NPRs, are superseded.
    Response: Under new Sec.  405.1837(e)(1), the Board will make a 
determination that a group formed under Sec.  405.1837(b)(1) (for 
mandatory group appeals) is fully formed. That determination will be 
made upon the group notifying the Board that the group is fully formed, 
or upon an order by the Board, following an opportunity for the group 
to show why the group should not be considered fully formed. Similarly, 
under Sec.  405.1837(e)(1), the Board will make a determination that a 
group formed under Sec.  405.1837(b)(2) (for optional group appeals) is 
fully formed based upon its judgment in a particular appeal, under the 
facts and circumstances, that the group is fully formed, or through 
instructions setting a time limit for keeping non-mandatory group 
appeals open, after which the group will be considered fully formed. 
There is no need to specifically state in the regulation text that any 
contrary instructions of the Board are superseded. Under section 
1878(e) of the Act, the provisions of this rule supersede any contrary 
instructions promulgated by the Board.
    Comment: One commenter stated that, although it supported the 
proposed change to allow groups to remain open past 12 months, commonly 
owned providers should have the ability to close groups so that they do 
not remain open indefinitely. It would be in the interest of both the 
Board and commonly owned providers to close a group so that the appeal 
may be moved forward, without prejudicing the rights of the remaining 
providers under common ownership or control. According to the 
commenter, chain organizations should be able to close a group appeal 
when a substantial number of providers have been added to the group. 
Remaining providers could be put into a subsequent group, which would 
be bound by the decision of the Board in the subsequent group. The 
commenter believes that this arrangement would be consistent with the 
language in section 1878(f)(1) of the Act that an appeal by providers 
under common ownership or control ``must be brought by such providers 
as a group with respect to any matter involving an issue common to such 
providers.''
    Response: We believe that we lack the authority to allow, for the 
same period, more than one group appeal per issue by commonly owned or 
controlled

[[Page 30213]]

providers. We believe that our proposal that a group appeal involving 
commonly owned or controlled providers not close until the group 
notifies the Board that the group is complete would have adequately 
protected other such providers that would like to join the group 
appeal.
    However, we are adopting our proposal with a modification. We are 
providing in Sec.  405.1837(e)(1) that the Board may issue an order 
requiring the group to demonstrate that at least one commonly owned or 
controlled provider has preserved the issue for appeal, in accordance 
with Sec.  405.1835, by claiming the relevant item on its cost report 
or by self-disallowing the item. The provider must not yet have 
received its NPR or other final determination with respect to an item 
for a cost year that is within the same calendar year as that covered 
by the group appeal (or it has received its NPR or other final 
determination with respect to an item for that time period, and the 
provider is still within the time to request a hearing on the issue). 
Once the Board has determined that a group appeal involving commonly 
owned providers is fully formed, no other provider under common 
ownership may appeal the issue (either by joining the group or by 
pursuing an individual appeal) that is the subject of the group appeal, 
with respect to a cost reporting period that falls within a calendar 
year covered by the group appeal, unless the Board modifies its 
determination that the group is fully formed.
    Comment: A commenter stated that it realizes that the requirement 
that commonly owned or operated providers must pursue legal or factual 
questions through a group appeal is contained in the statute. However, 
in some cases, hospital chain organizations are divided into regional 
divisions that operate independently, and therefore could make it 
difficult for the organization to identify common issues and manage 
group appeals across regions. According to the commenter, we should 
establish an exception to allow regional divisions that operate 
independently to bring separate group appeals.
    Response: Our interpretation of the statute is that commonly owned 
or operated providers must bring ``a'' group appeal on the same issue. 
If the Congress had intended to permit separate group appeals, it could 
have said that the appeal must be brought by ``one or more groups.'' 
Therefore, at this time, we believe we are constrained to require that 
commonly owned or operated providers bring only one group appeal for 
the same issue (regarding cost reporting periods ending in the same 
calendar year).
    Comment: A commenter noted that proposed Sec.  405.1837(c)(2) 
requires that the provider provide an explanation for the ``disputed 
cost'' or ``specific cost'' at issue in its request for a group appeal. 
This provision should be amended to use the more generic term ``item'' 
rather than ``cost,'' as there are items claimed on the cost report 
that may be challenged that are not ``costs'' per se (for example, a 
DSH payment). The commenter notes that ``item'' is used at Sec.  
405.1837(a).
    Response: We agree and have amended Sec.  405.1837(c)(2) 
accordingly.
    Comment: One commenter stated that the use of the phrases ``each 
specific cost at issue'' and ``each disputed cost'' are misleading, 
because group appeals are limited to one issue.
    Response: Proposed Sec.  405.1837(c) used the phrases ``each 
specific cost at issue'' and ``each disputed cost'' because, although a 
group appeal is limited to a single legal or factual issue, that issue 
could involve more than one line item on a cost report. As stated 
above, we have changed the word ``cost'' to ``item'' in Sec.  
405.1837(c)(2).

I. Amount in Controversy (Sec.  405.1839)

    We sought to clarify in the proposed rule the method for 
determining the amount in controversy for both individual and group 
appeals. Under our proposal, the amount in controversy would be 
determined based only on those particular adjustments that the provider 
has challenged and would include the combined total of all issues 
raised by the provider that arise within the same cost year. We also 
specified that in a single provider appeal, the provider could not 
aggregate issues across more than one cost year for purposes of meeting 
the amount in controversy requirement. However, two or more providers 
would be allowed to aggregate issues across more than one cost year to 
meet the amount in controversy requirement for a group appeal.
    We are adopting our proposals. In addition, we are adding new Sec.  
405.1839(c)(4) to provide that, where a provider has requested a 
hearing before an intermediary in accordance with Sec.  405.1811, and 
the amount in controversy is subsequently determined to be at least 
$10,000 (for example, due to a reassessment of the amount in 
controversy by the intermediary hearing office or due to adding an 
issue), the appeal will be transferred to the Board. Where a provider 
or group of providers has requested a hearing before the Board in 
accordance with Sec.  405.1835 or Sec.  405.1837, and the amount in 
controversy changes to an amount less than the minimum for a Board 
appeal due to the settlement or partial settlement of an issue, 
transfer of an issue to a group appeal, or the abandonment of an issue 
in an individual appeal, the change in the amount in controversy does 
not deprive the Board of jurisdiction. This is consistent with our 
longstanding policy. Where a provider or group of providers has 
requested a hearing before the Board pursuant to Sec.  405.1835 or 
Sec.  405.1837, and the amount in controversy changes to an amount less 
than the minimum for a Board appeal due to a more accurate assessment 
of the amount in controversy, the Board will not retain jurisdiction.
    Comment: One commenter noted that the proposed rule would require 
that the provider demonstrate that its reimbursement would increase by 
at least $10,000 (for an individual appeal) if the appeal is 
successful, and stated that, although the proposal was helpful because 
it did not rely upon the reimbursement determination in an NPR, the 
proposal does not directly address situations in which no NPR exists. 
The commenter suggested that we clarify that the jurisdictional amount 
is satisfied if the provider demonstrates that the total disputed 
program reimbursement for each cost reporting period at issue meets or 
exceeds the $10,000 threshold, without regard to whether an NPR or 
other determination reflects the disputed amount. In the past, 
confusion has arisen as to whether an amount in controversy for 
jurisdictional purposes existed before an NPR has been issued. For 
example, intermediaries may settle cost reports and issue original 
NPRs, and may subsequently render a final determination impacting the 
settled cost report. When a provider files an appeal prior to a 
reopening and issuance of a corrected NPR, issues have arisen regarding 
how to determine the amount in controversy. The Board has typically 
decided that the final CMS determinations are appealable, regardless of 
the issuance of a corrected NPR, and the Board allowed providers to 
``estimate'' the amount in controversy. The commenter stated that it 
appears that the proposed rule confirms the Board's position.
    Response: Regarding an appeal of a final CMS or intermediary 
determination, a provider satisfies the amount in controversy 
requirement by establishing that the final determination has a 
reimbursement effect of least $10,000 in controversy.

[[Page 30214]]

J. Board Jurisdiction (Sec.  405.1840)

    In the proposed rule, we sought to clarify the rules regarding the 
Board's preliminary determination of jurisdiction following a 
provider's hearing request. Among other things, at Sec.  
405.1840(a)(2), we proposed that the Board should be required to make a 
preliminary determination regarding jurisdiction in every case, and 
notify the parties of its jurisdictional findings before proceeding 
with the case.
    In Sec.  405.1840(b)(1), relating to specific matters that are 
removed from the Board's jurisdiction, we have updated the regulatory 
citations to the coverage appeals process and the Quality Improvement 
Organization appeals process. In Sec.  405.1840(c)(2) we corrected a 
citation to a specific paragraph of Sec.  405.1842, and in Sec.  
405.1840(c)(3), we clarified citations to specific paragraphs of Sec.  
405.1875.
    For a discussion of other changes we made to Sec.  405.1840(a)(2), 
please refer to section II.F. of this final rule (Intermediary Hearing 
Officer Jurisdiction).
    Comment: One commenter noted that there was no specific timeframe 
under which the Board was required to issue a decision when the 
intermediary has made a jurisdictional challenge. The commenter 
recommended that when the intermediary disputes jurisdiction, the Board 
should be given a period of 90 days to render a decision.
    Response: Although we understand the commenter's concern, we 
decline to impose a strict timeframe under which the Board would be 
required to issue a decision regarding a jurisdictional dispute raised 
by an intermediary. We believe that the Board, based on its own 
workload priorities, should be given unfettered discretion to set 
timeframes (with the exception of timeframes for discovery and subpoena 
requests) on jurisdictional and other pre-hearing matters such as the 
filing of position papers.
    Also, although not the subject of a specific comment, we believe 
that the notification requirements we imposed on the Board in proposed 
Sec.  405.1840(a)(2) are unduly restrictive and burdensome. In order to 
promote our vision of a more streamlined appeals process, we believe we 
would be ill advised to require the Board in all cases to notify the 
parties (presumably in writing) of its preliminary findings (that is, 
whether the request for hearing was timely, and whether the amount in 
controversy has been met) regarding jurisdiction. In most cases, 
jurisdiction is readily obtained, and there is essentially no need to 
formalize in writing that the Board has accepted jurisdiction. 
Therefore, we have amended new Sec.  405.1840(a)(2) accordingly. Where 
the Board finds that it does not have jurisdiction over every specific 
matter at issue in the appeal, the Board must issue a dismissal 
decision under Sec.  405.1840(c)(2) and notify each party to the 
appeal.

K. Expediting Judicial Review (Sec.  405.1842)

    Under section 1878(f)(1) of the Act, a provider in certain 
situations may immediately seek judicial review of an action of the 
intermediary involving a question of the statute or regulations 
whenever the Board determines that it is without authority to decide 
the issue. If the Board determines that it has jurisdiction over the 
issue, but it lacks the authority to decide the issue, the provider may 
obtain expedited judicial review (EJR). The intent of this provision is 
to eliminate undue delays resulting from a requirement that providers 
pursue time-consuming and unproductive administrative reviews before 
they could obtain judicial review of a Board determination. We proposed 
several changes to Sec.  405.1842 to clarify any confusion surrounding 
the procedures and the types of cases to which EJR applies.
    We are adopting our proposals. We have revised the text at Sec.  
405.1842(e)(3)(ii) to clarify that, upon receiving a request for EJR, 
the Board will have 30 days either to issue an EJR decision (if the 
request is complete) or issue a written notice to the provider that the 
provider has not submitted a complete request (describing in detail the 
further information that is needed to complete that request).
    Comment: One commenter noted that the proposed rule would require 
that, in instances in which a provider request for EJR is deemed 
incomplete by the Board, the Board must issue a written notice to the 
provider describing in detail the additional information needed to 
complete the request. The commenter suggested that the final rule 
provide that there be a 30-day period for the Board to provide a notice 
to the provider that the request for EJR is incomplete, and another 30-
day period for the provider to respond to the notice of incompleteness. 
Once a provider responds to the notice of incompleteness, the Board 
would have 30 days either to issue an EJR decision, or to ensure that 
the provider has received another notice of incompleteness. The 
commenter also suggested that intermediaries be required to comply with 
all of the deadlines applicable to the provider in the event that the 
intermediary files a response to the provider's request for EJR.
    Response: It was our intent that, upon receiving a request for EJR, 
the Board would have 30 days either to issue an EJR decision (if the 
request is complete) or issue a written notice to the provider that the 
provider has not submitted a complete request (describing in detail the 
further information that is needed to complete that request). We are 
clarifying the text at Sec.  405.1842(e)(3)(ii) accordingly. We decline 
to require that the provider be given 30 days to respond to a notice 
from the Board that its request for EJR is incomplete. We believe the 
time period in which to respond should be left to the Board's 
discretion, because a period shorter or longer than 30 days could be 
warranted, depending on the facts of the case.
    Comment: One commenter stated that the proposed rule would provide 
that, if any allegedly relevant lawsuit was filed before a final EJR 
decision, the Board would be precluded from conducting any further 
proceedings on the EJR decision until the lawsuit was resolved, and 
that it appears that the proposed policy would apply, regardless of the 
basis for the lawsuit. The commenter suggested that the final rule 
provide that the Board be required to conduct further proceedings on an 
EJR decision when the provider subsequently files a lawsuit brought on 
jurisdictional grounds other than the Social Security Act. If the Board 
were allowed to grant EJR, the issues jurisdictionally under the 
Medicare statute could be added to the pending matter in court, thus 
preserving judicial resources and avoiding multiple lawsuits.
    Response: The commenter is correct that the proposed policy would 
apply regardless of the jurisdictional basis for the lawsuit. However, 
we decline to adopt the commenter's suggestion that we make a 
distinction based on the jurisdictional basis pleaded in the complaint. 
We do not agree that it would be appropriate for the Board or the 
intermediary to spend its limited resources to spend time on a Board 
appeal if the provider has filed a complaint that involves a legal 
matter that is relevant to a legal issue in the Board appeal. If the 
court properly has jurisdiction over the appeal, the decision, that it 
or a higher court renders, may resolve the issue or issues in the Board 
case, or otherwise inform the Board in reaching a decision, or affect 
the parties' decision as to whether they should attempt to settle the 
Board case. On the other hand, where the basis for the court's 
jurisdiction is defective (which we believe would most likely be

[[Page 30215]]

the situation when a provider attempts to file a complaint based on a 
legal issue related to an appeal still pending before the Board), a 
contrary rule would not discourage providers from filing improper 
appeals with the court. We believe our proposal to be in line with the 
general rule practiced by courts that an appeal to a higher court 
deprives the lower court of jurisdiction to conduct further proceedings 
until the appeal is resolved by the higher court.

L. Parties to Proceedings in a Board Hearing or Intermediary Hearing 
(Sec.  405.1843 and Sec.  405.1815)

    In the proposed rule, we restated the longstanding position that 
CMS is not a party to a Board hearing. However, because CMS decisions 
and policies are very often the subject of provider disputes, we stated 
that we believed it would be important to include CMS in the hearings 
process, without conferring upon it the status of a party. Therefore, 
we proposed to authorize intermediaries to designate a representative 
from CMS (including an attorney) to defend the intermediary's position 
at a Board hearing. We also proposed that CMS could file amicus curiae 
briefs with the Board in cases having major policy implications, where 
CMS was not formally designated as the intermediary's legal 
representative.
    We have clarified in Sec.  405.1843(a) and in Sec.  405.1815 that 
it is the Board or the intermediary hearing officer (and not the 
intermediary) that determines whether an entity is a related 
organization of the provider, and that such a determination is made in 
accordance with the principles enunciated in Sec.  413.17 (and is not, 
strictly speaking, a determination made ``under'' Sec.  413.17).
    In Sec.  405.1843(b), we have clarified that, although the Board 
may call as a witness any employee or officer of Health and Human 
Services or CMS having personal knowledge of the facts and the issues 
in controversy in an appeal, the Department's Touhy regulations at 45 
CFR, Part 2 (Testimony by employees and production of documents in 
proceedings where the United States is not a party) apply as to whether 
such employee or officer will appear.
    We have added Sec.  405.1843(e) to provide that a non-party other 
than CMS may seek leave from the Board to file amicus curiae briefing 
papers with the Board. We have also added new Sec.  405.1843(f) to 
provide that the Board may exclude from the record all or part of an 
amicus curiae briefing paper. Where the Board excludes from the record 
all or part of an amicus curiae briefing paper submitted by CMS, it 
will state for the record its reason(s) in writing.
    Comment: Most of the commenters that addressed this proposal 
opposed enhanced involvement by CMS before the Board. One commenter 
suggested that if CMS files a timely amicus curiae submission with the 
Board, that submission should be based upon the record of the case. 
Upon Administrator review, any information or documentation submitted 
by CMS that was not included in the hearing record should be 
prohibited. Another commenter suggested that if CMS is allowed as a 
non-party to file amicus curiae submissions with the Board, other 
interested non-parties should also be able to file amicus curiae 
submissions. Two commenters suggested that the filing of an amicus 
brief provides a means for CMS to influence the process. One of these 
commenters suggested unfairness due to a lack of proper inquiry or the 
absence of cross-examination. Another commenter suggested that CMS 
should not be permitted to make amicus curiae submissions because CMS 
has sufficient opportunity to address its policies in other forums (for 
example, proposed rules or instructions). One commenter fully supported 
the proposal, stating that intermediaries would be better equipped to 
defend their actions by having a CMS representative handle the case.
    Response: We emphasize again that CMS will not be a party to a 
Board proceeding and, moreover, we do not anticipate that CMS normally 
will take a proactive role in defending policy positions before the 
Board. However, we reiterate that many Board appeals are directly the 
result of a CMS determination, not an intermediary determination, and, 
where this is the case, we believe it is reasonable to permit CMS an 
opportunity to defend its rationale for making the determination.
    Regarding the commenter that stated that if CMS will be allowed to 
file amicus curiae briefs, other non-parties should also be allowed to 
make amicus curiae submissions, we agree that the Board should retain 
the discretion on whether to accept them. We have added a new paragraph 
(e) to Sec.  405.1843 to state that a non-party other than CMS may seek 
leave from the Board to file an amicus curiae brief. The Board will 
have unfettered discretion to grant leave, and if leave is granted, the 
Board can accept or reject the brief in whole or in part.
    Regarding the commenter that was concerned that an amicus curiae 
submission filed by CMS with the Board might not be based upon the 
record of the case, we note that amicus curiae submissions in court are 
generally argumentative and not evidentiary in nature. To the extent 
that an amicus curiae submission purports to rely on evidence not 
before the Board, the Board may choose to attempt to have the record 
supplemented by that evidence, as well as to have the discretion to 
exclude from the record the submission in whole or in part. We have 
added new paragraph (f) to section Sec.  405.1843 to provide that the 
Board may exclude, in full or in part, an amicus curiae brief submitted 
by CMS or any other interested non-party (but that where it excludes 
all or part of an amicus curiae brief) submitted by CMS, it must state 
its reason(s) in writing.
    We also disagree with the commenter that suggested that the ability 
of CMS to file an amicus curiae brief somehow places CMS in a position 
where it can unduly influence the Board decision making process. The 
Board is an impartial, independent forum, and therefore takes its 
responsibility seriously in addressing and resolving the matters before 
it. The Board's only concern is to provide a fair and just hearing 
process and issue decisions in accordance with the law and regulations. 
As stated previously, the Board has discretionary authority, after 
reviewing a submission by CMS, to admit or exclude the submission from 
the record.
    Finally, we disagree with the commenter that suggested that CMS, 
rather than being able to submit amicus curiae briefs to the Board, 
should address its policies by way of publishing proposed rules or by 
issuing instructions. During the course of an adversary proceeding 
where potentially millions of dollars are at issue and significant 
program policies may be in dispute, the best means of defending 
existing policies are through effective advocacy and cogent oral and 
written arguments.
    Comment: One commenter suggested that we should acknowledge that 
CMS is the real party in interest in a Board proceeding so that 
providers would then have the full right to obtain discovery and 
testimony from CMS.
    Response: After reconsidering the issue, in this final rule we are 
not providing for discovery against CMS. As explained in section II.N. 
of this final rule, we are concerned that the ability of CMS to conduct 
its day-to-day business could be significantly compromised if it is 
constantly engaged in responding to discovery or forced to seek 
immediate Administrator review of

[[Page 30216]]

Board orders granting discovery. We also believe that discovery 
disputes concerning CMS, or the Secretary or a Federal agency, which 
may involve motions to compel or motions for protective orders or other 
procedural filings, will cause a further backlog of cases before the 
Board. For these reasons, we have decided that the discovery procedures 
in Sec.  405.1821 and Sec.  405.1853 will not apply to CMS, the 
Secretary (or any other component of HHS), or any other Federal agency. 
We have also revised the procedures for depositions at Sec.  
405.1853(e)(2)(ii) to clarify that the Department's Touhy regulations 
at 45 CFR, Part 2 (Testimony by employees and production of documents 
in proceedings where the United States is not a party) will apply as to 
whether an employee or officer of CMS or HHS will appear at a 
deposition.
    Comment: One commenter requested clarification as to whether the 
intermediary could call a CMS employee as a witness in a case before 
the Board. Two commenters suggested that proposed Sec.  405.1843 be 
eliminated and replaced with a provision that, where CMS has made the 
final determination upon which the Board hearing is based, a CMS 
representative should be required to testify at the hearing.
    Response: Current practice at the Board is that an intermediary 
will occasionally ask a CMS employee to testify at an oral hearing.
    We disagree with the commenters that suggested that Sec.  405.1843 
of the regulations be eliminated and replaced with a provision stating 
that a CMS employee should always be required to testify at a Board 
hearing when there is a CMS determination that is under dispute. 
Although CMS's policies and actions bear at least indirectly on each 
and every hearings dispute before the Board, CMS is not an adversarial 
party in the Board proceeding. That adversarial responsibility falls 
upon the intermediary. In most cases, the written submissions made by 
an intermediary in defense of a CMS determination are clear and 
succinct and would not require additional evidence, in the form of oral 
testimony by a CMS employee, to explain the determination.
    Comment: One commenter suggested that CMS representation of an 
intermediary violates the regulation (Sec.  405.1843(b)) which does not 
permit CMS to be a party to a Board hearing, unless CMS acts as an 
intermediary.
    Response: Our current regulation at Sec.  405.1843(b) permitted CMS 
to act as a party to a Board hearing in those cases where we served as 
a direct dealing intermediary for a small number of providers. We no 
longer act as an intermediary, and, for that reason, we proposed 
deleting the provision that allowed CMS party status at the Board. We 
have adopted this proposal. We note that when CMS provides 
representation for an intermediary at a Board hearing, the 
representation does not in any way elevate CMS to party status.
    Comment: Two commenters suggested that no matter how we 
characterize it, CMS should be considered a party to the Board hearing 
if it participates at the hearing. One of the commenters stated that, 
if CMS represents the intermediary at the hearing, the Administrator 
should not be allowed to review and overturn the Board's decision. 
Also, prevailing providers should be entitled to legal fees under the 
Equal Access to Justice Act (5 U.S.C. 504).
    Response: We once again reject the suggestion that the proposed 
limited participation by CMS at future Board hearings should define CMS 
as a party to the Board hearing. We also disagree with the suggestion 
that, if we represent the intermediary at the hearing, the 
Administrator would be required to recuse himself from reviewing the 
Board decision.
    The statute at section 1878(f) of the Act provides for the 
Secretary's review of a decision of the Board. This review is also 
consistent with section 557 of the Administrative Procedure Act (APA), 
which provides agency review of an initial decision. In this review 
process, the Administrator acts, pursuant to his or her delegated 
authority, for the Secretary in rendering a final decision. 
Consequently, the commenter's suggestion that the Administrator should 
be prohibited from reviewing a Board decision under the proposed 
circumstances is contrary to the plain language of the controlling law 
and the statutory framework provided by the APA.
    Because CMS is not a party to a Board hearing, we do not believe 
that the provisions of the Equal Access to Justice Act are applicable 
relative to the reimbursement of expenses incurred (for example, legal 
fees, expert witness fees, etc.).

M. Quorum Requirements (Sec.  405.1845)

    Three Board members, at least one of whom is representative of 
providers of services, constitute a quorum. Current regulations state 
that, 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 of Board members.
    In order to expedite the resolution of the large number of cases 
backlogged at the Board, we proposed that the Board Chairman could 
designate one Board member to conduct a hearing, allowing for more than 
one hearing to be held simultaneously. The Board Chairman would not be 
required to obtain the approval of the provider or the intermediary 
before assigning the case to a single Board member. In our view, the 
rights of the parties would not be prejudiced because the hearing 
decision would be issued by a quorum of Board members. We also proposed 
that a recommended decision would not be needed when less than a quorum 
conducted the hearing. Board members who were not present at the 
hearing would be able to review the record of the hearing and make an 
informed decision based upon that review. Also, we proposed that the 
Board could offer the parties the option to have a hearing on the 
written record. Both parties would be required to agree to waive their 
rights to an oral hearing as a condition for holding a hearing on the 
written record. We are not making any substantive changes to our 
proposal. We have clarified in Sec.  405.1845(d)(1) that a quorum is 
not required to issue a dismissal decision, which reflects current 
Board practice. We have made a technical change to proposed Sec.  
405.1845(f)(2), and, for clarity, we have renumbered proposed Sec.  
405.1845(f)(3) as paragraph (g), and accordingly renumbered proposed 
Sec.  405.1845(g) as paragraph (h).
    Comment: One commenter suggested that the interest of justice 
cannot adequately be served with only one Board member hearing the case 
in person. The other Board members could not fairly decide a case 
because they could not adequately adjudge the credibility of witnesses 
based on only a review of the written transcript of the hearing. 
Several commenters suggested that the Board should be required to 
obtain the approval of the provider or the intermediary before 
assigning less than a quorum to conduct a hearing. Because of the 
highly technical issues, if a Board member is not present, a simple 
review of the written record may not be sufficient to render an 
appropriate decision. Another commenter wanted to know if the full 
Board could be required to hear a case at the request of either the 
intermediary or the provider.
    Response: We disagree with the commenter that suggested that 
justice could not be served if only one Board member heard the case in 
person. Administrative law principles clearly allow for an adjudicator 
to resolve

[[Page 30217]]

disputes without being present at an oral hearing. Consistent with 5 
U.S.C. 557(b) of the APA, an administrative officer charged with the 
decision making (for example, a member of the Board) is not required to 
personally hear the testimony, but may rely instead on the written 
record. Although only one Board member may preside at the hearing, a 
quorum of at least three Board members (at least one of whom is 
representative of providers) is required to issue a final Board hearing 
decision. We believe our quorum requirement adequately ensures that the 
hearing process will be fair and that the resulting decision will 
reflect the reasoned opinion of the Board and not merely a single 
member of the Board.
    We also disagree with the commenters that suggested that the Board 
be required to obtain approval of the provider or intermediary before 
assigning less than a quorum to conduct a hearing. We do not believe 
that the rights of the parties are prejudiced in any way by not 
requiring the Board to obtain the permission of one or both of the 
parties to the hearing. Provided that the hearing decision is issued by 
at least a quorum of Board members, the parties to the hearing are 
being afforded procedural due process under the principles of 
administrative law. As stated above, the APA clearly permits an 
adjudicative officer to formulate a decision based only upon a review 
of the written record.
    As to the commenter that inquired whether a provider or 
intermediary could request the full Board membership to hear a case, we 
note that the Board has the discretionary authority to grant such a 
request.
    Comment: One commenter suggested that there should be at least two 
Board members present at live hearings to ensure that an individual 
Board member would not be able to sway the outcome of a Board decision.
    Response: We disagree with the suggestion that if only one Board 
member hears a case, that particular member is in a position to unduly 
influence the other decision makers. We disagree that fairness and 
impartiality in the decision making process is ensured only when a 
minimum of two Board members conduct a hearing.
    Comment: One commenter suggested that a provider might be 
prejudiced if two Board members assigned to a case reflect a 
``minority'' view of the Board. This could lead to inconsistent 
decisions on the same legal questions by different Board panels. Also, 
allowing less than five members to decide cases distorts Congress's 
intention in creating the Board.
    Response: Section 1878(h) of the Act requires that the Board be 
composed of five members, two of whom are representative of providers 
of services. At least one member must be a certified public accountant, 
and all of the members must be knowledgeable in provider payment 
principles. The Board, like all adjudicative bodies, strives for 
consistency in decision making. However, there may be occasions in 
which one panel of the Board hearing an appeal on an issue could decide 
differently from another panel of the Board with respect to the same 
issue. The Board, at its discretion, may seek to identify issues on 
which it is divided and ensure that a full complement of the Board 
(which at any given time may be less than five members) hears those 
issues. If either party is dissatisfied with a decision issued by the 
Board, review mechanisms are in place (Administrator, judicial review) 
to contest the decision. We also disagree with the commenter's 
statement that all five Board members must decide a case, so that 
congressional intent will not be distorted. Our longstanding policy, as 
contained in the regulations, allows for a quorum of at least three 
Board members (at least one of whom is representative of providers of 
services) to issue Board hearing decisions. This policy has been 
implemented for many years, has not been controversial, and has helped 
to create a more effective and efficient appeals process.

N. Board Proceedings Prior to Hearing; Discovery in Board and 
Intermediary Hearing Officer Proceedings (Sec.  405.1853 and Sec.  
405.1821)

    We proposed several revisions to Sec.  405.1853. Proposed Sec.  
405.1853(a) specified the present requirement that, prior to any Board 
hearing, the intermediary and provider must attempt to resolve legal 
and factual issues, and following that attempt, must send to the Board 
joint or separate written stipulations setting forth the specific 
issues that remain for Board resolution. We proposed removing the 
requirement that the intermediary ensure that all documentary evidence 
in support of each party's position is in the record. We proposed 
continuing 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 made several proposals concerning 
the timing, content and format of position papers. Specifically, we 
proposed that the Board would 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.
    Proposed Sec.  405.1853(c) and Sec.  405.1853(d) set forth 
requirements relating to ``initial'' and ``further'' status 
conferences, which could be for a wide variety of purposes.
    In Sec.  405.1853(e) and Sec.  405.1821 we proposed changes in 
discovery procedures for Board and intermediary hearing officer 
hearings. Proposed Sec.  405.1853(e)(1), and proposed Sec.  
405.1821(b)(1) specified 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) specified 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 criteria 
contained in the Federal Rules of Civil Procedure. We proposed that 
requests for admissions, or any other form of discovery other than 
requests for production of documents, interrogatories and depositions 
would not be permitted. Proposed Sec.  405.1821(b)(2) was similar, 
except that it would not permit depositions in proceedings before an 
intermediary hearing officer(s).
    In Sec.  405.1853(e)(3), we proposed time limits for requesting 
discovery. We proposed 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 further proposed that, upon request and upon a 
showing of good cause, the Board could extend the time for making a 
discovery request or extend the time for performing discovery. The 
Board would be permitted to extend the time for requesting discovery or 
for conducting discovery only if the

[[Page 30218]]

requesting party establishes that it was not dilatory or otherwise at 
fault in not meeting the original discovery deadline. If the Board 
granted the extension request, it would be required to impose a new 
deadline and, if necessary, reschedule the hearing date so that all 
discovery ended 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 proposed 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 proposed 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 proposed a 
general rule, and an exception thereto, for the reviewability of Board 
or intermediary hearing officer(s) orders on discovery. Generally, any 
discovery or disclosure ruling issued by the hearing officer(s) or the 
Board would not be final and would not be 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, or of 
judicial review of a final agency decision. However, we also proposed 
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. We proposed that there would be 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. If the 
Administrator granted 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 did not grant or take review within the time 
allotted for the stay, the stay would be lifted and the Board or 
hearing officer(s) ruling would not be immediately reviewable.
    We have made several changes to our proposals, as discussed below. 
We note that, in preparing this final rule, we remain concerned that, 
although under certain circumstances CMS would have had the right to 
seek immediate Administrator review of a Board disclosure or discovery 
ruling, the ability of CMS to conduct its day-to-day business could be 
significantly compromised if it is constantly engaged in responding to 
discovery or forced to seek immediate Administrator review of Board 
orders. We also believe that discovery disputes concerning CMS, or the 
Secretary or a Federal agency, which may involve motions to compel or 
motions for protective orders or other procedural filings, will cause a 
further backlog of cases before the Board. For these reasons, we have 
decided that the discovery procedures in Sec.  405.1821 and Sec.  
405.1853 will not apply to CMS, the Secretary (or any other component 
of HHS), or any other Federal agency. A non-party (other than CMS, or 
other Federal agency as described above) may only be required to 
respond to requests for the reasonable production of documents. A party 
will not be allowed to serve written interrogatories on any non-party, 
consistent with the general rule that interrogatories are not normally 
served on non-parties. We have also revised the procedures for 
depositions at Sec.  405.1853(e)(2)(ii) to clarify that the 
Department's Touhy regulations at 45 CFR Part 2 (Testimony by employees 
and production of documents in proceedings where the United States is 
not a party) will apply as to whether an employee or officer of CMS or 
HHS will appear at a deposition.
    As a result of these changes, we are hopeful that the discovery 
procedures as finalized will be fair to the parties and will streamline 
the appeals process. We believe that the current process for seeking 
documents under the Freedom of Information Act procedures will meet 
providers' needs for gaining access to information in our possession. 
We note that because these procedures are a procedural rule, and hence 
exempt from notice and comment rulemaking, we would be able to modify 
the rule's provisions insofar as they relate to CMS (or other Federal 
agency) through a CMS Ruling or other means.
    In Sec.  405.1853(b)(2), we removed the requirement that the Board 
must find good cause for extending the deadline for submitting a 
position paper. We believe that, for administrative efficiency and for 
purposes of fairness, the Board should have wide discretion to extend 
the time for submitting a position paper, as the facts and 
circumstances in any given case may so require.
    In Sec.  405.1853(b)(3), we have clarified that the ``timeframe to 
be decided by the Board,'' for purposes of submitting exhibits on the 
merits of the provider's claim, may be through a schedule applicable to 
a specific case or through general instructions. We also revised this 
paragraph to provide that the general rule, that any supporting 
exhibits regarding jurisdiction must accompany the position paper, is 
subject to a Board order or general instructions to the contrary.
    In Sec.  405.1853(e)(2), we have clarified the reference in the 
proposed rule to Federal Rules of Civil Procedure (FRCP) 32 governing 
the allowance of depositions in certain circumstances, and have 
specifically referenced FRCP 32(a)(3), with respect to the criteria the 
Board must employ in order to permit the deposition of a witness who 
does not wish to be deposed.
    In Sec.  405.1853(e)(3) and Sec.  405.1821(a)(2) we have modified 
the proposal's requirement that discovery must be ``received'' by a 
certain time, and have instead provided that discovery must be 
``served'' by a certain time, in order to prevent any disagreement and 
collateral litigation before the Board or the intermediary hearing 
officer(s) as to when discovery was actually received. With respect to 
the time period itself, we have changed the timeframe from 90 days 
before the scheduled date of the hearing, to 120 days before the 
initially scheduled starting date of the hearing, to ensure that the 
parties and Board have sufficient time to address any discovery 
disputes prior to the hearing. We have added clarifying language at 
Sec.  405.1821(c)(3)(iii)(B) and Sec.  405.1853(e)(5)(vii) to state 
that nothing in Sec.  405.1821 or Sec.  405.1853 authorizes the 
intermediary hearing officer or Board to compel any action from the 
Secretary or CMS. Likewise, in Sec.  405.1821(c)(2) and Sec.  
405.1853(e)(4), we have revised language that stated

[[Page 30219]]

that a non-party has the ``same'' rights as any party when responding 
to discovery requests. Although this statement was generally true under 
our proposal and remains generally true under this final rule, it is 
not entirely accurate with respect to CMS or the Secretary or any other 
Federal agency, as a non-party. Neither an intermediary hearing officer 
nor the Board may compel CMS or the Secretary or any other Federal 
agency to respond to discovery or take other action.
    In Sec.  405.1821(d)(2) we have revised the minimum time for the 
stay in the case of a CMS reviewing official reviewing a discovery 
ruling from 10 days to 15 days.
    Comment: Several commenters disagreed with our proposal to modify 
the requirement in section Sec.  405.1853(a) that providers must submit 
position papers to the Board no later than 60 days after the hearing 
request, and instead allow the Board to set position paper deadlines on 
a case-by-case basis. One commenter stated that the proposed change 
would reduce the certainty of timeliness and critical due dates, making 
case management more difficult for all parties, and that only the Board 
had authority to establish the appeals process before the Board. Other 
commenters stated that the Board should not have the authority to 
arbitrarily remove the reference to the 60-day timeframe for submitting 
position papers, or to set the deadlines for submitting position papers 
on a case-by-case basis as the Board deems appropriate, because there 
would be no consistency.
    Response: We disagree that our proposal would reduce the certainty 
of timeliness and critical due dates and make case management more 
difficult for all parties. The Board will issue a schedule of due dates 
for the filing of position papers and other events in each case, and 
the provider and intermediary will have adequate notice of the 
deadlines. We also note that it is very common for due dates for 
position papers to be extended beyond 60 days after the hearing 
request, and for the Board to set the due dates for other events on a 
case-by-case basis; we therefore, do not regard the proposal as a 
significant change in the way proceedings are currently conducted. 
Finally, we do not agree with the commenter's point that only the Board 
has the authority to establish appeals procedures before it. Under 
section 1878(e) of the Act, the Board has the authority to determine 
procedures to the extent that they are not inconsistent with the 
Secretary's regulations. Moreover, our proposal gives more, not less, 
discretion to the Board with respect to the setting of due dates for 
position papers, as compared to the current regulatory requirements. 
Changes that may occur from time to time in the volume and relative 
complexity of the Board's caseload weigh in favor of allowing the Board 
flexibility in setting due dates. In order to afford the Board greater 
flexibility, we are modifying our proposal that the Board may extend, 
for good cause shown, the deadline for submitting a position paper. We 
believe that the Board should have the discretion to extend the 
deadline without a showing of good cause (particularly because the 
Board has the discretion to set the initial deadline for the filing of 
the position paper).
    Comment: One commenter supported our proposal to remove the current 
requirement that the intermediary ensure that all documentary evidence 
in support of each party's position be in the record. This commenter 
also agreed with the proposal that the intermediary should be 
responsible for placing in the record all evidence considered by CMS in 
making a determination about an issue. The commenter suggested, 
however, that ``all relevant evidence,'' regardless of whether that 
evidence was considered by CMS, be placed in the record. The commenter 
also stated that the proposal should be expanded to specify the remedy 
to which a provider is entitled if CMS or the intermediary does not 
comply with the requirement to place evidence in the record. The 
proposal should also be expanded to specify the powers that the Board 
has to compel CMS to produce evidence, including documentary evidence, 
answers to interrogatories, and depositions of CMS witnesses. Finally, 
according to the commenter, the rule should provide effective, 
compulsory measures to ensure compliance by CMS.
    Response: We are not adopting the suggestion that the intermediary 
be required to place ``all relevant evidence'' in the record, 
regardless of whether that evidence was considered by CMS. We believe 
it is unclear whether, and to what extent, evidence that was not 
considered by CMS is nonetheless ``relevant.'' If a provider believes 
other evidence is relevant and therefore deserves to be made part of 
the record, the provider can move for its admission. Where a provider 
believes that an intermediary has not fulfilled its obligation to 
include evidence in the record that was considered by CMS in making a 
determination, the provider may seek an order from the Board. If the 
intermediary does not comply with an order of the Board, the Board may 
refer the matter to the component of CMS that has oversight of 
contractors. Also, on review of a final decision of the Board, the 
Administrator would have the authority to remand to the intermediary, 
if necessary, to supplement the record. As discussed below in section 
II.O. in connection with subpoenas, the Board does not have authority 
to compel CMS to take actions, including placing evidence in the 
record, answering discovery, or making witnesses available for 
depositions. However, upon review of a Board decision, the 
Administrator or a court may order the record to be supplemented with 
additional information, if necessary. We have added clarifying language 
at Sec.  405.1821 and Sec.  405.1853(e)(5)(vii) to state that nothing 
in Sec.  405.1821 or Sec.  405.1853 authorizes the intermediary hearing 
officer or Board to compel any action from the Secretary or CMS. 
Likewise, in Sec.  405.1821(c)(2) and Sec.  405.1853(e)(4), we have 
revised language that stated that a non-party ``including HHS and CMS'' 
has the same rights as any party when responding to discovery requests. 
We have deleted the reference to ``HHS and CMS'' because the 
intermediary hearing officer and Board discovery processes do not apply 
to CMS, HHS or any other Federal agency. The statement remains true 
with respect to other non-parties.
    Comment: One commenter stated that the current backlog of cases at 
the Board must be reduced. This commenter believes that a more 
aggressive approach to reducing issues that involve clear errors would 
be beneficial. According to this commenter, a number of appeals to the 
Board involve audit errors, clerical errors, or other minor issues that 
amount to little more than protective appeals. Although the proposal to 
require providers and intermediaries to attempt to resolve legal and 
factual issues would seem to be a mechanism to resolve these issues or 
errors, absent the involvement of the Board or its staff, no resolution 
occurs, and the appeal drags on to a hearing. The commenter recommended 
that a mechanism be established by which a provider can identify issues 
that should be quickly resolvable, and explain why they can be resolved 
quickly, followed by the Board or its staff convening a conference call 
to address the issues. In the commenter's view, bringing the parties 
together early in the appeal can eliminate some or all issues quickly, 
minimizing the burden on all involved.
    Response: Currently, intermediaries and providers are encouraged to 
work together to resolve disputes in order to avoid taking an issue to 
a hearing that

[[Page 30220]]

can and should be settled. We believe our proposal will further 
facilitate the resolution of issues. What the commenter recommends is 
descriptive of what currently takes place in many cases.
    Comment: One commenter noted that, although the proposed rule would 
encourage an early focus by the parties and the reviewing entity on the 
jurisdictional requirements for a hearing before the Board, the Board 
should be required to issue jurisdictional decisions early in the 
appeals process. There are many instances in which a hearing is held on 
the merits and the jurisdictional challenge simultaneously. Unless time 
limits for jurisdictional decisions are imposed, the parties may engage 
in additional, and possibly unnecessary, work. Preferably, all Board 
jurisdictional decisions should be rendered before the Board sends the 
acknowledgment letter establishing due dates for position papers and a 
tentative hearing date. Moreover, all Board jurisdictional decisions 
should be published for public viewing.
    Response: We decline to impose time limits for jurisdictional 
decisions at this time. The Board must balance the need for issuing 
jurisdictional decisions in an expeditious manner so as not to cause 
the parties possible unnecessary work with the need to schedule 
hearings and manage its caseload. We will monitor the situation, and, 
if necessary, we may impose specific time limits or issue guidance 
through a CMS Ruling, which would be binding on the Board. The Board 
has published jurisdictional decisions that it feels would provide 
guidance for intermediaries and providers. It is impractical and 
unnecessary for the Board to publish every jurisdictional 
determination.
    Comment: One commenter agreed with the proposal to include non-
parties, such as CMS, within the Board discovery procedures.
    Response: As finalized, the Board discovery procedures will apply 
to non-parties other than CMS, the Secretary (or other component of 
HHS) or any other Federal agency. We have decided to except Federal 
agencies from the intermediary hearing officer and Board discovery 
processes due to our concerns that a more expanded discovery process 
could cause significant disruption in their ability to manage their 
day-to-day activities, and due to our concern that discovery disputes 
involving CMS or other Federal agencies could cause a further backlog 
of cases before the Board. The Freedom of Information Act process 
remains available to providers and others seeking information from CMS 
or other Federal agency, and CMS employees are subject to being 
deposed, or required to testify or produce documents under the 
Department's Touhy regulations at 45 CFR Part 2.
    Comment: One commenter stated that it understood our concern that 
broad discovery procedures may impact the Board's ability to schedule 
and hold hearings in an efficient manner, but recommended that we 
expand the existing types of discovery permitted to include requests 
for admissions. Requests for admission have been an effective means of 
narrowing the issues on appeal, and can expedite the appeals process by 
facilitating settlement and reducing the amount of time necessary for 
the hearing. Moreover, allowing requests for admissions would be no 
more onerous to parties than responding to interrogatories. Another 
commenter stated that we have provided no rational reason why providers 
should be denied this important discovery tool, which is provided under 
the FRCP.
    Response: We are not including requests for admissions within the 
permitted types of discovery. We disagree that allowing requests for 
admissions would be no more onerous than responding to interrogatories. 
Apart from the burden caused by allowing another form of discovery in 
addition to interrogatories and requests for production of documents, 
there are special concerns with respect to requests for admissions. 
Failure to respond to requests for admissions timely could result in 
matters being deemed admitted, which could have dire consequences for 
the non-responding party in the case at hand and possibly for other, 
similar cases. We believe that the present process, whereby 
intermediaries and providers stipulate to matters not in dispute, works 
reasonably well in terms of narrowing issues, expediting appeals, and 
facilitating settlements. Our proposed revision to Sec.  405.1853 
places the duty on intermediaries to expeditiously attempt to join with 
the provider in resolving specific factual or legal issues and entering 
into stipulations. We are adopting this proposed revision. We expect 
that intermediaries will approach this requirement in good faith and 
will not seek to unduly prolong cases or force the provider to litigate 
matters that are not fairly in dispute. If a party believes, however, 
that an intermediary has not fulfilled its obligations, it may complain 
to the Board, and the Board may refer the matter to CMS if the Board 
believes it is appropriate to do so.
    Comment: One commenter stated that we should consider including a 
provision whereby the parties could stipulate that the issues and facts 
in their case are identical to the issues and facts in one or more 
cases, and could request that the same Board decision that has been 
rendered, or will be rendered in the like cases, be applied to their 
case.
    Response: We do not believe it is necessary to amend the 
regulations to state that the parties may so stipulate. As noted in our 
previous response, the intermediary must attempt to join with the 
provider to narrow the factual and legal issues in dispute. We see no 
reason why the parties could not stipulate that the facts and issues in 
one case are identical in all material respects to those in another 
case or cases. The Board has the discretion to consolidate like cases 
for hearing or (with the parties' consent) to dispense with the hearing 
in a case and effectively have that case be governed consistently with 
the decision in another case.
    Comment: One commenter stated that the final rule should clarify 
for discovery deadline purposes that the scheduled starting date of the 
Board hearing is the specific date the hearing is on the docket, and 
not the anticipated month of the hearing date listed on the ``key 
dates'' letter received from the Board when the appeal is filed.
    Response: Proposed Sec.  405.1853(e)(3), which we are adopting, 
uses the term ``scheduled starting date of the Board hearing,'' which 
is the specific date on the Board's docket. As discussed more fully 
below, this final rule references the deadlines to the ``initially'' 
scheduled starting date of the hearing, in recognition that hearings 
are often rescheduled.
    Comment: One commenter stated that an incomplete or late response, 
or no response at all, to a timely-filed request for discovery should 
be grounds for an extension of discovery.
    Response: Proposed Sec.  405.1853(e)(3) would have allowed the 
Board, for good cause, to extend the time for requesting or conducting 
discovery. On reexamination of our proposal, we believe that the Board 
should be allowed to extend the time for requesting or conducting 
discovery without requiring a showing of good cause. We do not believe 
it advisable to state that a late or incomplete response, or a non-
response, would necessarily lead to an extension of the time to seek or 
conduct discovery; rather, in any given case, the Board should evaluate 
the circumstances before it and exercise its discretion to allow or 
disallow an extension for seeking or responding to discovery.
    Comment: One commenter disagreed with our proposal to modify the 
time

[[Page 30221]]

limits for requesting discovery so that a party's discovery request 
must be received no later than 90 days before the scheduled hearing, 
and that discovery must be completed no later than 45 days before the 
scheduled hearing. The commenter noted that current Sec.  405.1853(b) 
technically allows parties to file discovery requests as late as one 
day before the hearing. The commenter nevertheless viewed the proposal 
as an attempt to restrict provider appeal rights through 
technicalities. Several commenters said that, in order for discovery to 
be timely, it should be received no later than 60 days prior to the 
hearing. Also, allowing a party to conduct discovery up to 45 days 
before the scheduled date of the hearing is excessive, and allowing 30 
days for discovery is adequate.
    Response: We believe it prudent to set deadlines on requesting, 
conducting, and responding to, discovery. We believe that it is 
important to strike an appropriate balance between allowing parties a 
sufficient time to conduct discovery for case preparation without 
disrupting the hearing process through last minute discovery requests. 
Our proposal would have allowed parties to request discovery no later 
than 90 days before the scheduled date of the hearing and to conduct 
discovery no later than 45 days before the scheduled date of the 
hearing. Upon further reflection, we have decided to require that a 
party's discovery request is timely if it is served no later than 120 
days before the initially scheduled starting date of the hearing, 
unless the Board extends the time for requesting discovery. We have 
modified the proposal's requirement that discovery must be ``received'' 
by a certain time, and instead provided in Sec.  405.1853(e)(3) and 
Sec.  405.1821(a)(2) that discovery must be ``served'' by a certain 
time, in order to prevent any disagreement and collateral litigation 
before the Board or the intermediary hearing officer(s) as to when 
discovery was actually received. ``Served'' has the same meaning as 
given to that term under the FRCP. We decided to use the initially 
scheduled starting date of the hearing as the focal point, because 
using the actual hearing date as the focal point would mean that a new 
discovery period could be obtained any time the hearing is rescheduled 
(as is often the case). We also want to ensure that the parties and the 
Board have sufficient time to address discovery disputes that may 
arise. We believe that, as finalized, the deadlines for submitting and 
responding to discovery do not pose significant difficulties for 
parties (and we note that, as revised in this final rule, the Board has 
discretion to extend the deadlines without a finding of good cause) and 
are necessary for the efficient administration of the hearing process.
    We have revised the language in Sec.  405.1853(e)(3)(ii) of the 
proposed rule that said discovery may not be ``conducted'' by a party 
any later than 45 days before the Board hearing, because we were 
concerned that ``conducted'' may have been unclear. In revised Sec.  
405.1853(e)(3)(ii), we set deadlines for holding a deposition, and for 
responding to interrogatories and requests for production of documents. 
Specifically, we have revised this paragraph to state that, in the 
absence of a Board order or instruction setting a specific starting 
date for the deposition, a party desiring to take a deposition must 
give reasonable notice of a scheduled deposition in writing to the 
deponent. However, in no event may the deposition be conducted later 
than 45 days before the initially scheduled starting date of the Board 
hearing, unless the Board extends the time for conducting the 
deposition. In the absence of a Board order or instruction setting a 
specific time, a party or non-party must respond to interrogatories or 
to requests for production of documents within the time allotted by the 
FRCP or according to a schedule agreed upon by the party requesting 
discovery and the party or non-party to which the discovery is 
directed. Responses to interrogatories and requests for production of 
documents must be served no later than 45 days prior to the scheduled 
starting date of the Board hearing, unless the Board extends the time 
for responding.
    We have deleted the requirement that the Board may extend the time 
in which to request discovery or conduct or respond to discovery only 
upon a showing by the requesting party that it was not dilatory or 
otherwise at fault in not meeting the original discovery deadline. Upon 
reexamination, we believe it is better to afford the Board the 
flexibility to extend discovery deadlines without such a showing.
    We are not prescribing deadlines for a time when a party must 
submit a motion to compel discovery or for a time when a party or non-
party must submit a motion for a protective order. Rather, the Board 
may wish to issue specific instructions as to a time when the motions 
must be filed.
    We have also amended proposed Sec.  405.1853(e)(3)(v) to state 
that, if the Board grants an extension for requesting or conducting 
discovery or responding to interrogatories or requests for production 
of documents, it may set a new hearing date, instead of (as proposed) 
being required to set a new hearing date.
    Finally, we have made corresponding changes to Sec.  405.1821, with 
respect to discovery in intermediary hearing proceedings.
    Comment: One commenter asked what would happen under the proposal 
if documentation was received after 45 days. Specifically, the 
commenter wished to know whether the documentation would be considered 
by the Board at the hearing, and stated that, if this were the case, 
the 45-day deadline meant little as timely discovery from the 
intermediary depended on what the intermediary had to review and from 
whom the request came. The same commenter also asked what the result 
would be if documentation was requested and received in the 45-day 
period, but additional data needed by the intermediary to supplement 
and test the original documentation arrived after the 45-day period had 
expired. The commenter also stated that further clarification was 
needed with regard to what documentation was due within 45 days, and 
what was due within 90 days.
    Response: We believe our revisions to Sec.  405.1853(e)(3)(ii), 
noted above, address the commenter's concerns. Discovery responses must 
be served no later than 45 days before the initially scheduled start of 
the Board hearing, unless the time for responding is extended by the 
Board. Where a party or non-party files responses late (or not at all), 
the Board will have the discretion to postpone the hearing or order 
some other remedy within its authority.
    Comment: Several commenters stated that, because it is likely that 
a party would never agree to a deposition, the rule needs to specify 
that in certain cases a party must agree to a deposition.
    Response: We do not agree that it is likely that a party will never 
agree to a deposition. Litigants in civil cases routinely agree to 
appear at depositions, whether in a spirit of cooperation or with the 
knowledge that the court can compel their attendance if necessary and 
appropriate. We anticipate that parties before the Board also will 
generally comply with notices of deposition. Moreover, we have 
specifically referenced, in the regulations text, Rule 32(a)(3) of the 
FRCP--this rule will be applied by the Board to allow the taking of a 
deposition in order to preserve testimony of an individual who might 
not be otherwise available to appear at the hearing. However, there may 
be instances in which a party reasonably believes that the time or 
place of the deposition, or the deposition itself, is unreasonable,

[[Page 30222]]

and, therefore may wish to resist appearing. In that situation, the 
party may petition the Board for a protective order. Conversely, where 
the party noticing the deposition believes that the deposed party is 
unreasonable in refusing to appear, it may file a motion to compel with 
the Board. We do not believe it is possible to state in advance, 
however, in which types of cases a party will not be allowed to refuse 
a notice of deposition. Whether a notice of deposition is reasonable or 
unreasonable will depend on the facts and circumstances of each case 
and is best left to the Board to manage through its ability to issue 
protective orders and orders to compel.
    Comment: Several commenters (in identical language) said that the 
proposed duration of the automatic stay (no more than 15 days for Board 
proceedings, and no more than 10 days for intermediary hearing 
officer(s) proceedings) is too strict, and that it would be more 
effective to have the automatic stay for Board and intermediary hearing 
officer(s) proceedings last no more than 30 days and 15 days, 
respectively.
    Response: The commenters misunderstood our proposals in Sec.  
405.1853(e)(6) and Sec.  405.1821(d)(2). We proposed that the duration 
of the automatic stay could be no less than 15 days for Board 
proceedings, and no less than 10 days for intermediary hearing 
officer(s) proceedings. In proposing minimum lengths for the stay, we 
wanted to ensure that the Administrator would have sufficient time to 
decide whether to take review of the matter before the stay had 
expired. Although we continue to believe that the proposed periods are 
sufficient, in order to ensure that the CMS reviewing official would 
have sufficient time to review an intermediary hearing officer order, 
we have revised the minimum time for the stay in Sec.  405.1821(d)(2) 
to 15 days. With respect to the commenters' suggestion that the 
automatic stay not last more than 30 days for Board proceedings, and 
not more than 15 days for intermediary hearing officer(s) proceedings, 
we decline to restrict the Board or intermediary hearing officer from 
initially setting a longer stay than the minimum period prescribed, in 
order to address the possibility that, due to unusual circumstances, 
the Board or intermediary hearing officer may believe that a longer 
period is needed for a party to seek review of the discovery order and 
for the Administrator or CMS reviewing official to decide whether to 
take review. Likewise, we believe that, as we proposed in Sec.  
405.1853(e)(6)(ii) and Sec.  405.1821(d)(2), if the Administrator or 
CMS reviewing official decides to take review, the stay should continue 
until the Administrator or CMS reviewing official issues a decision on 
the matter, rather than prescribing a set period for which the 
Administrator or CMS reviewing official may rule, as some cases may be 
more complex than others, and the Administrator's or CMS reviewing 
official's other review responsibilities may be more voluminous at one 
time than at another.

O. Subpoenas (Sec.  405.1857)

    Section 1878(e) of the Act states that the provisions of sections 
205(d) and 205(e) of the Social Security Act with respect to subpoenas 
apply to the Board to the same extent that they apply to the 
Commissioner of Social Security with respect to title II (Social 
Security) of the Act. In the proposed rule, we proposed time limits for 
requesting Board subpoenas that would be similar in some respects to 
those we proposed for the discovery process. For subpoenas requested 
for purposes of discovery, a request would be timely if received at 
least 90 days before the scheduled hearing date. For a subpoena 
requested for the purpose of compelling attendance of a witness at the 
hearing, a request would be timely if received at least 45 days before 
the scheduled hearing. The Board could not issue a discovery subpoena 
any later than 75 days before the initial scheduled hearing date, and 
could not issue a hearing subpoena any later than 30 days before the 
scheduled hearing. The Board would have discretion to extend the 
timeframes for requesting subpoenas. The Board would also have the 
authority to issue subpoenas to non-parties. Finally, only the 
Administrator would have the authority to seek enforcement of a Board 
subpoena.
    We have adopted our proposals, with some modifications. Some of the 
modifications are parallel to those revisions we made to our discovery 
proposals in Sec.  405.1853(e). That is, in Sec.  405.1857(a)(2)(i), we 
revised the deadline by which a request for a subpoena for discovery 
must be received by the Board, from 90 days before the scheduled 
starting date of the Board hearing, to 120 days of the initially 
scheduled starting date of the hearing. The revised time period 
essentially mirrors the time period for requesting discovery under 
Sec.  405.1853(e)(3)(i). As explained in section II.N. of this final 
rule, we decided to use the initially scheduled starting date of the 
hearing as the focal point, because using the actual hearing date as 
the focal point would mean that a new discovery period could be 
obtained any time the hearing is rescheduled, and we also wish to focus 
the parties' attention on discovery early in the appeals process. 
Because we revised the deadline by which the Board must receive a 
request for subpoena for discovery, we have also revised the deadline 
for issuing a subpoena, from 75 days before the scheduled starting date 
of the Board hearing to 90 days before the initially scheduled starting 
date of the Board hearing. Like the deadline for seeking discovery, 
however, under this final rule, the deadlines for requesting a Board 
subpoena for discovery and for the Board to issue a subpoena for 
discovery, are subject to extension by the Board in its discretion. 
Likewise, if the Board extends the period for requesting or issuing a 
subpoena, the Board has the discretion to reschedule the hearing date. 
The extension procedures also apply to requests for, and issuances of, 
Board subpoenas for purposes of an oral hearing. (See Sec.  
405.1857(a)(4).) We have also made a clarifying change to proposed 
Sec.  405.1857(d)(2)(v). With respect to the situation where a party or 
non-party seeks immediate review of a Board subpoena, and the 
Administrator may, but chooses not to, grant or take own motion review 
of the subpoena, we have revised the language that stated ``the Board's 
action stands'' to ``the Board's action is not immediately 
reviewable.'' The revision was made in recognition of the fact that the 
Administrator could review the subpoena in the course of review of a 
final decision made by the Board. We clarified language in Sec.  
405.1857(b)(3) that suggested the Board ``must comply'' with the FRCP 
and the Federal Rules of Evidence for guidance. As revised, this 
paragraph states that the Board ``uses'' such authorities for guidance.
    Finally, we are adding language to proposed Sec.  405.1857(a)(1)(i) 
to clarify that the Board may not issue a subpoena to CMS or to the 
Secretary (or to any Federal agency), and we are also removing the 
references to HHS and CMS in proposed Sec.  405.1857(c)(4), 
redesignated to Sec.  405.1857(c)(3), in order to prevent any 
implication that the Board may issue a subpoena to CMS or to the 
Secretary.
    Comment: One commenter stated that an incomplete or late response, 
or no response at all, to a timely-filed request for discovery should 
be grounds for an extension of a subpoena request.
    Response: Proposed Sec.  405.1857(a)(4) would have allowed the 
Board, for good cause, to extend the time for requesting or issuing a 
subpoena. On reexamination of our proposal, we

[[Page 30223]]

believe that the Board should be allowed to extend the time for 
requesting or issuing a subpoena without requiring a showing of ``good 
cause.'' We do not believe, however, that it is advisable to state that 
a late or incomplete response, or a non-response to a discovery 
request, will necessarily lead to an extension of the time to request 
or issue a subpoena. Rather, in any given case, the Board should 
evaluate the circumstances before it, and exercise its discretion to 
allow or disallow an extension for requesting a subpoena, or for 
permitting itself an extension for issuing a subpoena. We have also 
decided, for the reasons stated above with respect to the time for 
requesting and completing discovery, to modify the proposed timeframes 
for a party to request a subpoena for purposes of discovery and for the 
Board to issue a subpoena for that purpose. Under the final rule at 
Sec.  405.1857(a)(2)(i), a party may request a subpoena for purposes of 
discovery no later than 120 days before the initially scheduled 
starting date of the Board hearing, and, at Sec.  405.1857(a)(3)(i), 
the Board may issue a subpoena for that purpose no later than 90 days 
before the initially scheduled starting date of the Board hearing.
    Comment: One commenter opposed the proposal that a Board subpoena 
may be enforced only by the Administrator. The Board's decision to seek 
enforcement is interlocutory (that is, non-final) in nature, and 
therefore is not subject to immediate review by the Administrator. 
Moreover, even if the Administrator otherwise could review a non-final 
decision by the Board, section 1878(e) of the Act grants the Board sole 
authority to decide to initiate judicial action to enforce a Board 
subpoena.
    Response: For the reasons stated in section II.T. of this final 
rule, we disagree that the Administrator lacks the authority to review 
non-final orders of the Board. We also disagree that section 1878(e) of 
the Act grants the Board sole authority to decide whether to pursue 
judicial enforcement of one of its subpoenas. Under the commenter's 
view, the Administrator could reverse a decision of the Board on the 
merits, but would be unable to prevent the Board from seeking any 
enforcement action that the Administrator would believe was 
inconsistent with law or agency policy. This position contravenes the 
well-established principle that the Administrator, on review of Board 
actions, has all of the powers that the Administrator would have had in 
making the initial decision. (See Homan & Crimen v. Harris, 626 F.2d 
1201, 1205 (5th Cir. 1980); 5 U.S.C. 577(b).) Moreover, the statute 
plainly grants the Secretary, and by extension the Secretary's 
designee, that is, the Administrator, the authority to issue subpoenas 
and seek enforcement of them, as sections 205(d) and 205(e) of the Act 
have been incorporated into title XVIII of the Act through section 1872 
of the Act. It is not clear how litigation to enforce a subpoena could 
proceed on behalf of the Administrator if the Administrator, as the 
Secretary's designee, were opposed to bringing that action.
    Comment: One commenter commended us for proposing that non-parties 
may be subpoenaed by the Board. Another commenter stated that the rule 
should expressly acknowledge that the Board has the power to subpoena 
HHS and other government agencies. A provider's appeal rights under 
section 1878 of the Act would be rendered meaningless if the Board 
lacked the power to subpoena relevant and material evidence from HHS. 
This is particularly important in cases where CMS has rendered the 
determination at issue. Another commenter objected to the proposal that 
the Administrator may review and overrule a Board decision to subpoena 
a witness or documents as an affront to the Board's independence. This 
commenter was concerned that the Administrator might abuse this power 
to avoid having CMS policy experts testify before the Board.
    Response: For the reasons stated in the Administrator's Order dated 
July 29, 2004, in Baystate Medical Center v. Mutual of Omaha (PRRB Case 
Nos. 96-1822, 87-1579), and in the Administrator's Order dated November 
20, 2006, in Duane Morris Outpatient Blended Rate Group v. Blue Cross 
Blue Shield Association (PRRB Case No. 06-2057G), we believe there is 
no statutory basis for the Board to subpoena HHS and other Federal 
agencies. The United States and its agencies, as sovereign, are immune 
from suit, except to the extent to which they consent to be sued. It is 
also well-settled that a waiver of sovereign immunity ``cannot be 
implied, but must be unequivocally expressed.'' (See Franconia 
Associates v. United States, 536 U.S. 129, 141 (2002).) There is no 
indication in the language of sections 205(d) and 205(e) of the Act, or 
in the legislative history of those sections, that the Congress 
intended to effect a waiver of sovereign immunity. (Indeed, the fact 
that the party seeking to enforce the subpoena would be a Federal 
agency makes it even more unlikely that the Congress intended to waive 
sovereign immunity, for it cannot be lightly assumed that when the 
Congress enacted sections 205(d) and (e) in 1939, it intended to allow 
one agency to sue another agency.) To the contrary, the use of the 
words ``individual'' and ``person'' in sections 205(d) and 205(e) of 
the Act indicate that the Congress did not intend to waive sovereign 
immunity. It is a well-settled rule of statutory construction that 
``person'' does not include the sovereign, unless the statute 
affirmatively provides otherwise, and this rule is particularly 
applicable where it is claimed that the Congress intended to waive 
sovereign immunity. (See Will v. Michigan Dep't of State Police, 491 
U.S. 58, 64 (1989).) Because the Congress did not waive sovereign 
immunity in sections 205(d) or 205(e) of the Act, it did not waive it 
in section 1878(e) of the Act (which grants the Board the subpoena 
powers contained in sections 205(d) and 205(e)). Because only the 
Congress, and not Federal agencies, has the authority to waive 
sovereign immunity, (see United States v. N.Y. Rayon Importing Co., 329 
U.S. 654, 660 (1947)), we would be unable to subject HHS and other 
agencies to the Board's subpoena authority even if we were otherwise so 
inclined.
    We are adding language to proposed Sec.  405.1857(a)(1)(i) to 
clarify that the Board may not issue a subpoena to CMS or to the 
Secretary (or to any Federal agency), and we are also removing the 
references to HHS and CMS in proposed Sec.  405.1857(c)(4), 
redesignated to Sec.  405.1857(c)(3), in order to prevent any 
implication that the Board may issue a subpoena to CMS or to the 
Secretary.
    Although the Board does not have the authority to subpoena HHS and 
other Federal agencies, we do not agree with the commenter that a 
provider's appeal rights are rendered meaningless in the absence of 
that authority. In cases in which the provider believes it is necessary 
to obtain information from HHS (including CMS), the provider may gain 
access to information through the Freedom of Information Act, which is 
applicable to all Federal agencies. Most, if not all, agencies 
(including HHS) also have ``Touhy regulations,'' by which agencies may 
make documents or witnesses available to the requester if sufficient 
need is shown, and other criteria are satisfied. Finally, upon review 
of a final decision of the Board or the Administrator, a court may 
order that the record be supplemented with additional information.
    Comment: Several commenters, in identical language, said that the 
proposed duration of the automatic stay (no more than 15 days for Board 
proceedings and no more than 10 days for intermediary hearing 
officer(s) proceedings) is too strict and that it

[[Page 30224]]

would be more effective to have the automatic stay for Board and 
intermediary hearing officer(s) proceedings last no more than 30 days 
and 15 days, respectively.
    Response: The commenters misunderstood our proposals. We proposed 
that the duration of the automatic stay could be no less than 15 days 
for Board proceedings. In proposing a minimum length for the stay, we 
wanted to ensure that the Administrator would have sufficient time to 
decide whether to take review of the matter before the stay had 
expired. We continue to believe that the proposed periods are 
sufficient. With respect to the commenters' suggestion that the 
automatic stay not last more than 30 days for Board proceedings, and 
not more than 15 days for intermediary hearing officer(s) proceedings, 
we decline to restrict the Board from initially setting a longer stay 
than the minimum period prescribed, in order to address the possibility 
that, due to unusual circumstances, the Board may believe that a longer 
period is needed for a party to seek review of the subpoena and for the 
Administrator to decide whether to take review. Likewise, we believe 
that, as we proposed, if the Administrator decides to take review, the 
stay should continue until the Administrator issues a decision on the 
matter, rather than prescribing a set period for which the 
Administrator may rule, as some cases may be more complex than others, 
and the Administrator's other review responsibilities may be more 
voluminous at one time compared to another.

P. Record of Administrative Proceedings (Sec.  405.1865 and Sec.  
405.1827)

    We proposed 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. In particular, we proposed to 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, would be made part of 
the record of the appeal. Any evidence ruled inadmissible by the Board, 
and any other material not considered by the Board in making its 
decision, would, to the extent practicable, have to be clearly 
identified and segregated in an appendix to the record for the purpose 
of any review by the Administrator and/or the judiciary. We further 
proposed that, for purposes of Administrator review, the administrative 
record would also include 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. We also proposed that the Administrator 
would have the authority to reverse the Board's determination regarding 
the admissibility of evidence or other matter. Additionally, we 
proposed corresponding changes, in part, to Sec.  405.1827, relative to 
the record established at intermediary hearings. We are adopting our 
proposals.
    Comment: One commenter stated that the proposed revision to allow 
the Administrator to reverse Board determinations on evidence and 
unilaterally include or exclude evidence could cause the entire 
administrative process to be viewed negatively. If the Administrator is 
given the authority to dismiss evidence after the hearing decision has 
been rendered, there should be a process provided for provider rebuttal 
or alternative arguments to be filed on the record prior to proceeding 
to judicial review.
    Response: Our proposal was facially neutral, in that it would 
permit the Administrator to include, where appropriate, evidence that 
the intermediary or provider wanted included (but that was excluded by 
the Board), or to exclude, where appropriate, evidence that the 
intermediary or provider wanted excluded (but that was included by the 
Board). Because, under longstanding policy, the Board employs a relaxed 
standard for the introduction of evidence (rather than following the 
Federal Rules of Evidence), we believe there will be relatively few 
instances in which the Board does not allow evidence that should have 
been allowed, or includes evidence that should not have been allowed. 
In those relatively few instances, however, in which the Board makes an 
improper (in the Administrator's view) ruling on an evidentiary matter, 
it is appropriate that, where practicable, the Administrator, as the 
final agency arbiter, includes within, or excludes the evidence from, 
the record. Where the Administrator takes review of a case, the parties 
may comment on the Board's decision, including whether evidence that 
was excluded by the Board should have been included, and whether 
evidence that was included by the Board should have been excluded. If 
the provider does not agree with the Administrator's ruling as to the 
composition of the record, it may pursue its objections with a court. 
We believe that, in most cases, a provider will have advance notice as 
to any issues concerning the inclusion or exclusion of evidence, but in 
any instance the provider believes that it was surprised by the 
Administrator's action, it is adequately protected by pursuing its 
judicial remedies (it may also seek reopening from the Administrator). 
We note that in any case in which the Administrator takes review, his 
or her precise reasoning on legal or policy issues or on the weight to 
be given certain evidence may be unanticipated by a provider, yet there 
has never been (nor, we submit, a need for) a formal process to make 
objections prior to seeking judicial review.

Q. Board Actions in Response to Failure To Follow Board Rules (Sec.  
405.1868)

    In the proposed rule, we sought to specify how the Board would 
exercise its authority under section 1878(e) of the Act to respond to: 
(1) Intentional delaying tactics by a provider or intermediary; or (2) 
a failure by the provider or intermediary to timely heed a Board order 
or rule. We proposed that, if a provider fails to meet a filing or 
procedural deadline or other requirement set by the Board, the Board 
may dismiss the hearing request or take other appropriate action. We 
also proposed that, if the intermediary failed to meet any filing or 
procedural deadlines or other Board requirements, the Board would have 
the right to issue a decision based on the written record submitted to 
that point or to take other appropriate action. (We note, however, that 
the text of the proposed rule inadvertently failed to reflect this 
specific proposal, which we have adopted and incorporated into the text 
of this final rule.)
    We have adopted our proposals. We have clarified that the Board's 
authority, in the situation where an intermediary fails to meet a 
filing deadline or other requirement established by the Board, does not 
extend to, as a sanction, reversing or modifying the intermediary or 
Secretary determination or ruling against the intermediary on a 
disputed issue of law or fact. We have renumbered proposed Sec.  
405.1868(d)(3) as paragraph (e) and made corresponding numbering 
changes. We have also added paragraphs (f) and (g) as a result of 
adopting the first and second of our ``Three Additional Proposals Under 
Consideration'' (see section II.W. of this final rule). We have also 
corrected a citation error in Sec.  405.1868(d)(2), which referred to a 
Board dismissal decision ``under [non-existent] paragraph (f)(1) of 
this section.''

[[Page 30225]]

    Comment: One commenter suggested that, although the provider may be 
penalized with a dismissal sanction, there is no corresponding sanction 
for an intermediary. The commenter noted that an intermediary could 
deliberately fail to file a position paper, have the case heard and 
decided on the record, and then submit a motion for CMS Administrator 
review with no provider rebuttal. The commenter believes that the only 
way the intermediary sanction provision could be effective is if the 
intermediary would not be allowed to request Administrator review. 
Another commenter noted that the proposed rule lacked an appropriate 
sanction against the intermediary for failing, for example, to meet 
filing deadlines. The commenter suggested that the Board should try to 
motivate the intermediary into compliance by barring the intermediary 
from submitting certain evidence, or limiting the materials that the 
intermediary could submit. Another commenter supported the intermediary 
sanction proposal and suggested that an intermediary's failure to 
follow a Board order should be entered in the written record of the 
proceedings and passed along to CMS as a potential contract violation.
    Response: After reviewing all the comments, we are adopting the 
proposals that we set forth in the proposed rule. Most of the comments 
we received on this subject came from providers, and reflect a 
perceived disparate treatment by the Board when a provider, rather than 
an intermediary, fails to follow a procedural rule or timeframe set by 
the Board. We proposed two possible actions by the Board, one 
applicable to a provider and the other applicable to an intermediary. 
That is, the worst case scenario for a provider would be a dismissal of 
the appeal by the Board, while the harshest remedy for an intermediary 
would be the issuance of a decision by the Board based on the written 
record established at the point of the intermediary's violation. 
However, we note that, because providers are the proponents of a case, 
they are responsible for moving the case forward by meeting all 
deadlines. Additionally, at section 1878(e) of the Act, the Congress 
has given the Board authority to make rules and establish procedures to 
carry out its function. Moreover, we note that the Board will have 
broad discretion to weigh the particular facts at hand in order to 
decide whether or not an offense merits remedial action. We disagree 
with the commenter that suggested that an intermediary should not be 
allowed to request Administrator review if the Board has sanctioned the 
intermediary and issued a decision on the record. The commenter is 
incorrect in suggesting that the provider would be unable to rebut the 
intermediary's position at the Administrator level. It has been 
longstanding policy that, when the Administrator accepts review, each 
party may rebut the other party's legal arguments (although the parties 
are prohibited from submitting additional factual evidence that is not 
within the record). Moreover, we believe that any sanction assessed by 
the Board against a party should factor into a reviewing entity's 
deliberations. For example, where the Board issues a decision based on 
the written record because an intermediary did not file a position 
paper, the Administrator, upon review, may look unfavorably at the 
intermediary's inaction.
    We also disagree with the commenter that believed that the proposed 
rule did not provide for an effective sanction against the 
intermediary. Again, we are clarifying that the proposed rule did not 
identify a complete listing of all potential Board sanctions. The Board 
has the authority to take appropriate action against either party for 
procedural violations, but appropriate action does not necessarily mean 
a dismissal or the early issuance of a decision by the Board. We 
believe that these provisions will alert both parties that the Board 
has a mechanism in place to effectively stop a delaying tactic, or to 
redress other procedural violations. As a result, the parties should be 
less inclined to ignore procedural requirements and, accordingly, be 
more motivated to meet the deadlines set by the Board.
    Finally, we agree with the commenter that suggested that if an 
intermediary failed to abide by an order of the Board in a timely 
fashion, the Board could pass along that information to CMS as a 
possible contract violation. In Sec.  405.1868(c)(2), we codify the 
Board's ability to take this action.
    Comment: One commenter noted that intermediaries often miss Board 
deadlines for filing position papers, leaving providers unaware of the 
arguments the intermediary intends to use at the hearing. The commenter 
suggested that the final rule should require the Board to bar an 
intermediary from submitting late evidence and arguments, unless there 
is a showing of good cause. Another commenter suggested that the 
intermediary's evidence should be excluded from the hearing when the 
intermediary is noncompliant with Board rules.
    Response: We believe that the Board's authority to sanction either 
party pursuant to section 1878(e) of the Act will serve as a strong 
impetus for the parties to customarily respond in a timely manner to 
Board-ordered deadlines. As to the commenters' suggestions regarding 
the possible exclusion of evidence, we note that it is within the 
Board's discretion to decide whether a party should be barred from 
submitting late evidence and arguments.
    Comment: Two commenters noted that, contrary to our stated 
intention in the preamble, the proposed regulations text at Sec.  
405.1868(c) did not specify that the Board may issue a decision based 
on the written record to that point when the intermediary fails to meet 
a filing or procedural deadline set by the Board.
    Response: We agree with the commenters and have added new text at 
Sec.  405.1868(c)(1) to specify that the Board may issue a decision 
based on the written record when the intermediary fails to meet a 
filing deadline or other procedural requirement imposed by the Board.
    Comment: One commenter noted that, when an intermediary fails to 
comply with a Board order or deadline, and the Board issues a decision 
based on the written record, upon review, the Administrator will remand 
all these cases back to the Board to consider additional arguments. The 
commenter suggested that, due to intermediary non-compliance, when the 
Board decides to close the record and issues a decision based on the 
written record to that point, the Administrator should not be able to 
remand the case to the Board or consider the arguments not in the 
record.
    Response: We do not agree that in this situation the Administrator 
would always remand a case back to the Board to consider any missing 
arguments. We believe that if the Board issues an early decision based 
on the written record because of an intermediary violation, the 
Administrator, on review, may regard the intermediary violation in a 
negative light. Therefore, we would not expect that the Administrator 
would necessarily remand the matter to the Board for further evidence, 
unless the Administrator believes that the Board's decision to close 
the record itself was erroneous.

R. Scope of Board's Authority in a Hearing Decision (Sec.  405.1869 and 
Sec.  405.1829)

    Section 1878(d) of the Act provides that the Board has the 
authority to affirm, modify, or reverse the intermediary's findings on 
each specific matter at issue in the intermediary's determination and 
to make other revisions on specific matters, regardless

[[Page 30226]]

of whether the intermediary has considered those matters in making its 
determination. In the proposed rule, we sought to clarify that the 
Board's power to make additional revisions would not authorize the 
Board to consider or decide a specific matter at issue for which it 
lacked jurisdiction or for which it was not timely raised in the 
hearing request. Additionally, we proposed revising the title of Sec.  
405.1829 and made certain corresponding changes to this section 
relative to intermediary hearings. We are adopting our proposals. We 
have deleted paragraphs Sec. Sec.  405.1869(b)(2)(i) and (b)(2)(ii) as 
superfluous.
    Comment: One commenter suggested that, because the Board has the 
authority to affirm, modify, or reverse an intermediary's determination 
and to make additional revisions, regardless of whether the 
intermediary considered those matters, the Board should likewise have 
the authority to direct intermediaries to make reopenings necessary to 
effect the ``flow-through'' of issues affecting multiple years. For 
example, a reversal of interest capitalized by the intermediary in one 
year, but not subsequently amortized by the provider pending the 
outcome of the appeal, should be corrected for all years involved.
    Response: We disagree with the suggestion that the Board has, or 
should have, any authority to direct intermediaries to reopen to effect 
the ``flow-through'' of issues impacting multiple years. The Board's 
authority is limited by statute to ruling on appeals that have been 
brought before it. Therefore, the onus is on the provider to identify, 
on an annual basis, any disputed items on its cost report for that 
particular cost year, and, if it chooses, and the amount in controversy 
requirement is met, to file an appeal before the Board for that cost 
year. The Board is not empowered to rule on cost years not before it, 
and generally lacks any equitable powers to direct an intermediary to 
take any specific action. Moreover, even if we had the authority to 
confer upon the Board the authority to direct the intermediary to 
reopen previous cost years, we would not do so. Reopenings generally 
have been a matter of intermediary discretion, and have not been used 
as a substitute for appeals. We do have the authority to direct 
intermediaries to conduct reopenings where we provide explicit notice 
to the intermediary that the intermediary's determination was 
inconsistent with the applicable law, regulations, CMS Ruling, or CMS 
general instructions in effect, based on our understanding of those 
legal provisions at the time that the intermediary determination was 
made (and not based on any change in policy, whether self-realized or 
directed by a court).
    Comment: Two commenters suggested that the proposed clarification 
would be inconsistent with the plain meaning of section 1878(d) of the 
Act, because it imposes impermissible limits on the Board's statutory 
authority to consider all matters covered by the cost report. One of 
the commenters believed the policy directly contravened the decision by 
the D.C. Court of Appeals in HCA Health Services of Oklahoma v. 
Shalala, 27 F.3d 614 (D.C. Cir. 1994). In that case, the court stated 
that ``once Board jurisdiction pursuant to subsection (a) [of section 
1878 of the Act] obtains, anything in the original cost report is fair 
game for a challenge by virtue of subsection (d).''
    Response: We disagree with the suggestion that our proposal, 
specifying that the Board can only make additional revisions to an 
intermediary determination when it has jurisdiction to grant a hearing 
on the issue and the issue has been timely raised, is inconsistent with 
the statute. As we stated in our discussion of ``Adding Issues to 
Original Hearing Request'' in section II.D., the straightforward 
language of section 1878(d) of the Act grants the Board the authority 
to consider a wide range of issues, but does not address the timing for 
the inclusion of issues. The statutory provision relating to the timing 
of an appeal is located at section 1878(a)(3) of the Act, wherein it is 
clearly stated that a provider has the right to request a Board hearing 
within 180 days after notice of the final determination. Thus, if a 
provider does not indicate to the Board in a timely fashion that it is 
dissatisfied with a certain aspect of the final determination, the 
provider does not satisfy one of the key components for establishing 
jurisdiction, that is, timeliness. Accordingly, the provider will be 
unable to dispute that particular issue before the Board. Moreover, we 
believe that the Board must obtain jurisdiction over an issue before it 
can rule on the issue. If the Board decides that it lacks jurisdiction 
over a particular issue, it cannot entertain that issue, despite the 
language contained in section 1878(d) of the Act. We read section 
1878(d) of the Act as permitting the Board to make revisions to cost 
report line items that flow directly from determinations in which the 
provider has expressed dissatisfaction and filed a jurisdictionally 
proper appeal under section 1878(a) of the Act. See Little Co. of Mary 
Hosp. and Health Care Ctrs. v. Shalala, 828 F. Supp. 570, 576 (N.D. 
Ill. 1993), aff'd 24 F.3d 984 (7th Cir. 1994).
    Finally, we disagree that our proposed clarification is contrary to 
the decision in HCA Health Services of Oklahoma v. Shalala. The timing 
of a request for an appeal is critical to establishing jurisdiction. If 
a provider does not timely express dissatisfaction to the Board of a 
particular matter in a final determination and, therefore, does not 
establish jurisdiction before the Board over that matter, the provider 
cannot then seek to rely upon section 1878(d) of the Act for relief.

S. Board Hearing Decision and Intermediary Hearing Decision (Sec.  
405.1871, Sec.  405.1831 and Sec.  405.1833)

    We proposed to require that the Board's decision, with respect to 
any issue for which the policy expressed in a CMS instruction (other 
than a regulation or CMS Ruling) is dispositive, but for which the 
Board did not affirm the intermediary's adjustment, explain how the 
Board gave great weight to such instruction (as required by Sec.  
405.1867), but did not affirm the intermediary's adjustment.
    We are adopting our proposals. We are amending proposed Sec.  
405.1871(a)(4) to state that where the Board's decision reverses or 
modifies an intermediary determination on an issue for which the policy 
expressed in an interpretive rule (other than a regulation or a CMS 
Ruling), general statement of policy or rule of agency organization, 
procedure or practice established by CMS would be dispositive of that 
issue (if followed by the Board), the Board decision must explain how 
it gave great weight to such interpretive rule or other such 
instruction but did not uphold the intermediary's determination on the 
issue. We are also revising the reference to ``general CMS 
instructions'' in proposed Sec.  405.1871(a)(4) to read ``other 
interpretive rules, general statements of policy, and rules of agency 
organization, procedure or practice established by CMS.'' We are making 
a similar change to other sections in the proposed regulations text 
where the term ``general CMS instructions'' appeared.
    Relative to intermediary hearings, we have made a technical change 
to Sec.  405.1831(d) concerning the component within CMS to which 
intermediary hearing officer decisions should be sent. As the CMS 
Office of Hearings neither currently receives nor reviews such 
decisions, we amended this provision to indicate that the decisions 
should be sent to CMS (currently, the decisions are received by the 
Center for Medicare Management, a component within CMS). Additionally,

[[Page 30227]]

we revised Sec.  405.1833 to clarify that an intermediary hearing 
decision is final and binding unless the decision is reviewed by a CMS 
reviewing official. Also, intermediary hearing decisions are subject to 
the provisions of Sec.  405.1803(d).
    Comment: One commenter recommended that the preponderance of the 
evidence standard of proof be replaced with the Generally Accepted 
Government Auditing Standards' standard, which is ``sufficient, 
competent, and relevant evidence that would persuade a reasonable 
person of the validity of the findings.'' Because CMS has issued manual 
instructions to comply with Government Auditing Standards, it would be 
inappropriate to impose a higher standard of proof in the appeal than 
required by auditing standards.
    Response: We are not adopting the comment. We believe the 
preponderance of the evidence standard to be well-understood and widely 
used by administrative and judicial tribunals. We do not see any 
inconsistency between Government Auditing Standards, which pertain to 
whether audit findings are valid, and our proposal, which pertains to 
the determination of whether the provider has ultimately met its burden 
of proof regarding a certain issue.
    Comment: Two commenters objected to the statement in the preamble 
that the Board would be required to explain how it has given great 
weight to CMS instructions (other than regulations and CMS Rulings) 
when declining to uphold an intermediary's adjustment. The first 
commenter stated that it was not clear to which instructions the 
statement was referring. Moreover, according to the commenter, we have 
failed to identify any valid reason why the Board should give CMS 
instructions any weight beyond whatever weight they deserve by reason 
of their own inherent power to persuade. Only substantive rules that 
have gone through notice and comment rulemaking have the force and 
effect of law. The second commenter stated that the proposal was 
inconsistent with the requirements of the Administrative Procedure Act 
and offends the authority and independence of the Board. In this 
commenter's view, the Board should merely be required to acknowledge 
that it had considered and given weight to the instructions. According 
to this commenter, the proposal suggests that the Administrator will 
have grounds to reverse the Board's decision if the Board does not 
follow the instructions, raising this to the same level as statutes or 
regulations.
    Response: Existing Sec.  405.1867 (issued in 1983) provides that 
``the Board must comply with all the provisions of title XVIII of the 
Act and regulations issued thereunder, as well as CMS Rulings'' and 
that ``[t]he Board shall afford great weight to interpretive rules, 
general statements of policy, and rules of agency organization, 
procedure or practice established by CMS.'' We did not propose to 
change this provision and we are not doing so. The purpose of the 
proposal was to require the Board, in order to facilitate Administrator 
or court review, to explain, where a CMS instruction was seemingly on 
point, how the Board complied with the existing requirement that it 
give great weight to the instruction, but nevertheless reversed an 
intermediary's adjustment. With respect to the commenter's point that 
it was not clear to which instructions we were referring, the final 
rule, at Sec.  405.1871(a)(4), uses the language ``an interpretive rule 
(other than a regulation or CMS Ruling), general statement of policy, 
or rule of agency organization, procedure or practice established by 
CMS.''
    We are unsure of the meaning of the first commenter's statements: 
(1) That we had failed to identify a valid reason why the Board should 
give CMS instructions any weight beyond whatever weight they deserved 
by reason of their own inherent power to persuade; and (2) that only 
substantive rules that have gone through notice and comment rulemaking 
have the force and effect of law. To the extent that the commenter was 
arguing that we were proposing that CMS instructions (other than 
regulations and CMS Rulings) were binding on the Board, this is 
incorrect. Under current Sec.  405.1867, CMS instructions (other than 
regulations and CMS Rulings) are not binding on the Board, but rather 
must be given great weight by the Board, and, again, we did not propose 
to change this regimen. In many cases, if an instruction is squarely on 
point and is given great weight by the Board, the instruction may be 
determinative of the outcome. However, that is not always the case 
(hence our proposal to explain how an instruction was given great 
weight but was not determinative). If the commenter was asserting that 
only substantive rules that have gone through notice and comment 
rulemaking are entitled to some level of automatic deference by the 
Board, we disagree. As noted above, Sec.  405.1867 has long provided 
that CMS instructions other than regulations or CMS Rulings are 
entitled to great weight by the Board. Moreover, CMS Rulings and some 
regulations are not substantive (that is, legislative) rules, and yet 
CMS Rulings and all CMS regulations are binding on the Board under 
Sec.  405.1867. Finally, we note that courts are required to give 
controlling weight to an agency's interpretation of its regulations, 
unless plainly erroneous or inconsistent with the regulation. See 
Thomas Jefferson University v. Shalala, 512 U.S. 504, 512 (1994). It 
would be anomalous if the Board were not required to give great weight 
to a manual instruction that (unless plainly erroneous or inconsistent 
with the regulation) would be given controlling weight by a court.
    Comment: One commenter suggested a refinement in the proposal that 
the Board must explain how it gave great weight to a CMS instruction 
(other than a regulation or CMS Ruling) that would be dispositive of 
the issue if followed by the Board but nevertheless did not uphold the 
intermediary's determination. The commenter stated that the requirement 
should be limited to published instructions distributed or available to 
providers, which would include policy positions published in the 
Federal Register, but which would not include individual letters to CMS 
internal components or to other individuals.
    Response: By ``instructions,'' we mean an interpretive rule (other 
than a regulation or CMS Ruling), general statement of policy, or rule 
of agency organization, procedure or practice established by CMS. The 
Board is already required, by virtue of Sec.  405.1867, to give great 
weight to these instructions. For purposes of our proposal, we do not 
believe it is necessary or advisable to amend the types of instructions 
for which the Board is required to give great weight.
    Comment: One commenter stated that there should be a deadline for 
decisions to be made by the Board from, as applicable, the date of the 
hearing, the date of the agreement for an on-the-record hearing, or the 
date a jurisdictional challenge is submitted. A deadline would assure 
all the parties that the Board's decision would be issued by a certain 
date, that follow-up from all parties would not be necessary, and that 
cases would not get lost in the system. The same commenter also 
recommended that ``the instructions'' include various timeframes as 
guidelines for the Board to follow, which would increase the efficiency 
of monitoring the cases for all parties.
    Response: We decline generally to prescribe by rule the time by 
which the Board must issue decisions. We believe the Board is in the 
best position to manage its own docket and determine when it can issue 
decisions. Some cases

[[Page 30228]]

will be more complicated than others or otherwise will take longer to 
resolve. For example, Board members may or may not be in complete 
agreement about all of the issues, or there may be Board vacancies that 
may affect the quorum necessary for issuing a decision. This rule does 
prescribe the time for the Board to issue an EJR decision (or a 
determination that the request for EJR is incomplete), because the 
statute places a time limit on the issuance of EJR decisions by the 
Board.

T. Administrator Review (Sec.  405.1875)

    In the proposed rule, we offered clarifications to the existing 
procedures for obtaining Administrator review of a Board decision. For 
example, we proposed to clarify that the date the Administrator 
decision is rendered is the date the Administrator signs the decision, 
not the date the decision is mailed. We also provided a list of the 
types of final Board decisions that would be subject to immediate 
review by the Administrator. In addition, we specified that the 
Administrator would have the authority to remand a matter not only to 
the Board, but also to any component of HHS or CMS, or to an 
intermediary.
    We are adopting our proposed clarifications. In Sec.  
405.1875(b)(1) and Sec.  405.1875(b)(5), pertaining to the illustrative 
list of criteria for obtaining Administrator review, and in Sec.  
405.1875(e)(3)(i), relating to the authorities upon which the 
Administrator's decision may rely, we have made a technical change, 
replacing ``general CMS instructions'' with ``other interpretive rules, 
general statements of policy, and rules of agency organization, 
procedure, or practice established by CMS.'' In Sec.  405.1875(e)(3), 
we revised the language that stated the Administrator's decision 
``must'' rely on certain authorities to the Administrator's decision 
``may'' rely on those authorities, in order not to suggest that the 
Administrator's decision must rely on an authority (such as a prior 
decision of the Board), that is on point but not persuasive. (Note that 
current Sec.  405.1875(g)(4) states that the Administrator ``may'' rely 
on prior decisions of the Board, the Administrator and the courts.) We 
have also made certain organizational changes to paragraphs Sec.  
405.1875(c)(1) and Sec.  405.1875(c)(2), moving material from Sec.  
405.1875(c)(2) to Sec.  405.1875(c)(1), and have made a number of minor 
wording changes.
    Comment: A commenter objected to our proposal to add Sec.  
405.1875(f)(5) to state that the Administrator has the authority to 
remand a matter to a component of HHS, CMS, or to an intermediary under 
appropriate circumstances (including, but not limited to, the purpose 
of implementing a court's order). According to the commenter, the 
proposal is inconsistent with section 1878(f) of the Act, which states 
that a decision of the Board will be final, unless the Administrator 
reverses, affirms, or modifies the Board's decision. If the 
Administrator disagrees with the Board's determination, the 
Administrator can take necessary action without further delaying 
provider appeal rights. There is no need for the Administrator to 
remand to a lower component of his or her own agency to obtain 
necessary input. This commenter also disagreed with our proposal to 
revise Sec.  405.1877(b) to state that an Administrator remand of a 
Board decision is not subject to judicial review. The commenter 
believes that the proposal is without legal support of any kind, and is 
simply intended to delay indefinitely providers' judicial appeal 
rights.
    Response: We recognized in the proposed rule that there is a split 
of authority on the issue of whether the Administrator has remand 
authority. We continue to believe, however, that the better view is 
that he or she does. See Gulf Coast Home Health Services, Inc. v. 
Califano, 1978 U.S. Dist. LEXIS 15069 (D.D.C.). From a textual point of 
view, the fact that section 1878(f) of the Act states that the 
Secretary may affirm, reverse, or modify a decision of the Board does 
not mean that the Administrator (as designee of the Secretary) may not 
also take the lesser action of remanding a case to the Board. We also 
discern no reason why the Congress would have wanted the Administrator 
to issue a final decision in a case that the Administrator believed 
needed further development. The Administrator and the Office of the 
Attorney Advisor are not well-situated to take additional testimony or 
develop further facts, seek additional documentation, clarify or 
perform additional audit findings, etc. Thus, without authority to 
remand, the Administrator would be forced to choose between possibly 
disadvantaging the program or the provider in a case that the 
Administrator believes is not ripe for decision, but that needs further 
development. In this case, if the Administrator were to issue a 
decision against the provider, and the provider were to appeal the 
decision to a court, the likely and ironic result would be that the 
court would remand the case back to the Administrator or the Board for 
further findings. In a decision issued against the Medicare program, 
the program would fare worse than the provider in the first example, as 
CMS cannot appeal a decision of the Administrator. We believe that a 
more fair and efficient process is for the Administrator to retain the 
authority to remand to the Board for further action in appropriate 
circumstances. We also do not agree with the commenter's assertion that 
our proposed provision, that an Administrator remand order is not 
judicially reviewable, is without legal foundation. Remand orders of 
agencies and courts are interlocutory (non-final) in nature and 
generally are not subject to immediate review.
    Comment: One commenter objected to our proposal to allow immediate 
Administrator review of discovery or disclosure rulings and subpoenas 
to which objections were made based on privilege or other protection 
from disclosure. According to the commenter, neither type of 
interlocutory (that is, non-final) appeal should be permitted, because 
neither type is defined by statute to be a final decision. If, however, 
the Administrator should be given the authority to review immediately 
Board rulings granting discovery or issuances of subpoenas, the 
Administrator should also have the authority to review Board rulings 
denying a discovery request or a request to issue a subpoena.
    Response: We believe that our proposal is consistent with the 
statute, because the statute does not specifically prohibit the 
Administrator from taking immediate review of non-final Board rulings. 
We also note that the Administrator, on review of Board actions, has 
all of the powers that he or she would have had in making the initial 
decision. See Homan & Crimen v. Harris, 626 F.2d 1201, 1205 (5th Cir. 
1980); 5 U.S.C. 577(b). Thus, we believe that, just as the Board has 
the authority to rule on discovery or subpoena matters, so too does the 
Administrator. In the proposed rule, we explained that it was important 
that the Administrator be able to take immediate review of Board 
rulings granting discovery or issuing a subpoena over an objection 
based on privilege or other protection from disclosure because, once 
complied with, any harm from an inappropriately ordered disclosure 
cannot be undone. Experience has shown that objections based on 
privilege or other protection from disclosure will be infrequently 
made, but, where asserted, will be made in a good faith belief that 
disclosure will be unduly burdensome or harmful. Moreover, we believe 
that objections will be made most often by CMS, or by intermediaries on 
behalf of CMS, with

[[Page 30229]]

respect to CMS records in the custody of intermediaries. Because the 
Board has no statutory authority to compel production of CMS records 
(including records subject to the Privacy Act), we believe it is 
appropriate, as a condition to allowing the Board under our regulations 
to compel the intermediary to produce CMS records, that the 
Administrator reserve the right to review immediately a Board order 
compelling production of CMS records.
    We are not adopting the commenter's suggestion that Board orders 
denying discovery should be subject to immediate review. Although we 
recognize that, in some cases, it may be inconvenient for an 
intermediary or provider to proceed with its case without discovery 
that was requested but inappropriately denied, we believe that the 
potential inconvenience does not rise to the level of the potential 
harm that could result from inappropriate disclosures, and thus do not 
believe that the Board proceedings should be potentially disrupted by 
appeals of Board orders denying discovery or subpoenas, or that it 
would be a wise use of CMS's resources to present these appeals to the 
Administrator for his immediate review. Where the Board denies a 
party's request for a Board order granting discovery or its request for 
the Board to issue a subpoena, the party may raise the issue, if 
necessary, in an appeal of the final decision of the Board to the 
Administrator or to a court, as applicable.
    Comment: One commenter objected to the proposal that the date of 
the Administrator's decision, for purposes of meeting the 60-day 
requirement in section 1878(f)(1) of the Act is the date it is signed, 
instead of the date it is mailed or transmitted. This commenter 
believes that a signed, but untransmitted, decision is not official and 
can be withdrawn, changed, or otherwise modified before transmission. 
Further, the date of mailing or transmission is not subject to 
tampering and can easily be confirmed. Any internal problems with 
obtaining timely Administrator decisions or transmission following 
signing should be the responsibility of the agency, and these 
shortcomings should not prejudice the providers. Use of the date 
signed, rather than transmitted, is inconsistent with compliance for 
every other deadline associated with these rules.
    Response: We are adopting our proposal without change. The statute 
requires that the Board's decision will be final unless the 
Administrator, within 60 days after the provider of services is 
notified of the Board's decision, ``reverses, affirms or modifies the 
Board's decision.'' We believe that upon the Administrator's signing of 
a decision, the reversal, affirmance, or modification action is 
complete. Our interpretation is reinforced by the statute's provision 
that the time for which a provider must seek judicial review of an 
Administrator decision does not begin to run until the provider has 
received the decision. Thus, we believe our proposal is consistent with 
the language of the statute. We note that the court in Sun Towers, Inc. 
v. Heckler, 725 F.2d 315 (5th Cir. 1984), agreed with this 
interpretation in rejecting the provider's argument that the 
Administrator's decision was untimely because it was signed before, but 
mailed after, the 60th day after the provider received the Board's 
decision. According to the court in Sun Towers, the plain wording of 
the statute requires only that the Administrator's decision be rendered 
within 60 days of the provider's receipt of the Board's decision, 715 
F.2d at 319, that there is no additional requirement in the statute 
that the decision be entered on any docket or mailed within 60 days of 
the provider's receipt of the Board's decision, 715 F.2d at 324, and 
that, therefore, the Secretary's interpretation that the 
Administrator's decision is effective upon signing was entitled to 
deference, 715 F.2d at 324-25.
    We are also guided by practical considerations in choosing our 
interpretation over any other possible interpretation. Under 
longstanding practice, a signed Administrator decision is returned to 
the Office of the Attorney Advisor for making copies and for 
transmitting to the parties. If the Administrator's decision had to be 
received by the Office of the Attorney Advisor and mailed by the 60th 
day, the decision would have to be signed several days in advance, thus 
reducing the already very constricted time period for Administrator 
review. Although the statute gives the Administrator 60 days after the 
provider receives the Board's decision to conduct review and render a 
decision (which by itself is very brief), the period is effectively 
reduced by our process for seeking Administrator review.
    We believe that parties to the Board's decision should have an 
adequate period in which to decide whether to seek Administrator 
review, and that, following a notice of intent to review, the parties 
should have a further period to submit comments on the Board's 
decision. Therefore, consistent with the existing regulations, we 
proposed that a party to the Board's decision would have 15 days after 
receipt of the Board decision to request that the Administrator review 
it, and that, upon notice from the Administrator of intent to review 
the decision, a further 15-day period for submitting comments will be 
granted. (Having received no comments on this proposal, we are adopting 
it without change.) If the Administrator decision had to be mailed by 
the 60th day, we would have to consider reducing the period of time in 
which the parties could submit comments on the Board's decision.
    Finally, we disagree with the commenter that providers are 
disadvantaged by our proposal. Regardless of whether the Administrator 
has 60 days in which to sign a decision or 60 days in which to mail a 
decision, the provider's time in which to seek judicial review of the 
Administrator's decision does not run until it receives the decision.
    Comment: One commenter stated that the criteria we proposed for 
Administrator review should be exclusive, not illustrative.
    Response: We are not adopting the commenter's suggestion. Although 
we believe we have listed all of the reasons that would motivate the 
Administrator to take review, we nevertheless have chosen not to make 
the list exclusive. This is because there can be more reasons than we 
have listed, and also because we do not want to encourage any 
litigation on whether the reason given by the Administrator for taking 
review in any given case actually fits within the criteria specified. 
By making the list of reasons for review illustrative and not 
exclusive, the parties may have greater opportunity to seek 
Administrator review of Board decisions. This is a matter of 
convenience to providers, as it would allow them to appeal to the 
Administrator, rather than having to file a lawsuit, and is more than a 
convenience to the intermediaries, as the intermediaries may not appeal 
to court an unfavorable Board decision that becomes the final decision 
of the Secretary because the Administrator did not take review.
    Comment: Several commenters stated that, regarding the proposal 
that the Administrator be able to include or exclude evidence that was 
excluded or included by the Board, the Administrator should only be 
able to rule on the record, because it is the record on which the Board 
based its decision, and it is the only thing a court may use to 
overturn a Board or Administrator decision.
    Response: We believe it is appropriate that, as the Secretary's 
designee, the Administrator should have the final

[[Page 30230]]

administrative say as to whether the Board admitted evidence presented 
to it that it should have excluded, or excluded evidence presented to 
it that it should have admitted, or that the record before the Board 
was incomplete and should be supplemented on remand. Notwithstanding 
the commenters' assertions, we believe that our proposal is consistent 
with the authority courts have in reviewing administrative agency 
decisions, including decisions of the Board or the Administrator.

U. Judicial Review (Sec.  405.1877)

    In the proposed rule, we sought to clarify the existing procedures 
for timely obtaining judicial review of a Board or Administrator 
decision. In particular, we proposed to clarify that a provider is not 
required to seek Administrator review in order to obtain judicial 
review. In the final rule, we have made certain technical changes to 
the proposed text, including clarifying language in Sec.  
405.1877(c)(3). We have also reorganized proposed Sec.  405.1877(g)(2) 
and Sec.  405.1877(g)(3) by reversing their order.
    Comment: One commenter agreed with the proposal to clarify that, 
when the Administrator notifies the parties that he will review a Board 
decision, and does not render a decision within the 60-day period for 
review, the provider has 60 days from the end of the Administrator 
review period to file an action for judicial review.
    Response: We are adopting the proposal without change. We believe 
that the clarification will assist providers in understanding the time 
period for filing for judicial review in this situation.

V. Reopening Procedures (Sec.  405.1885 through Sec.  405.1889)

    Reopening procedures are authorized specifically by our 
regulations, based on the Secretary's general rulemaking authority in 
sections 1102(a) and 1871(a) of the Act. The following is a non-
exhaustive list of matters that we sought to clarify and revise in the 
proposed rule:
     CMS retains the ultimate authority as to whether an 
intermediary may or may not reopen a matter.
     A change in legal interpretation or policy by CMS in a 
regulation, CMS Ruling, or CMS general instruction (whether self-
directed or influenced by a court decision) is not a basis for 
reopening a determination.
     CMS may direct an intermediary to reopen a determination 
in order to implement a final agency decision, a final court judgment, 
or an agreement to settle an administrative appeal or a lawsuit.
     A decision whether to reopen or not to reopen a 
determination is not subject to further administrative review or 
judicial review.
     For own motion reopenings, the notice of reopening must be 
mailed no later than 3 years after the date of the determination.
     In cases not involving an allegation of fraud, a 
provider's request for reopening must be received no later than 3 years 
after the date of the determination; however, the intermediary or 
reviewing entity may issue the notice of reopening within a reasonable 
time after the expiration of the 3-year period.
     A final determination may not be reopened after the 3-year 
period, except where the determination was procured by fraud or similar 
fault.
     An intermediary may reopen a determination that is pending 
on appeal before the Board or the Administrator; the intermediary may 
also reopen a determination for which no appeal has been taken, but for 
which the time to appeal to the Board has not yet expired.
     An intermediary or reviewing entity is obliged to provide 
written notice of the reopening, allow the parties an opportunity to 
present additional evidence, and notify the parties at the conclusion 
of the reopening of the results, including any revisions.
     Any matter considered during the course of a reopening, 
but not subsequently revised, is not appealable through any revised 
determination issued after the reopening; as a corollary, the scope of 
appeal of a revised determination is limited to the specific revisions 
that were made in the revised determination.
    We are adopting our proposals. We added clarifying language to 
Sec.  405.1885(a) to emphasize that only the entity that made the 
original determination or decision may conduct the reopening of the 
determination or decision. We have also added clarifying language to 
Sec.  405.1885(b)(2) to state that, if a request for reopening is made 
timely, for example, shortly before the expiration of the 3-year period 
specified therein, the request remains timely, notwithstanding that the 
notice of reopening required by Sec.  405.1887 is issued after the 
expiration of the 3-year period. We also clarified in Sec.  
405.1885(b)(2) that the rules for the date of receipt of a reopening 
request be consistent with our revised definition of ``date of 
receipt'' at Sec.  405.1801(a). We have also added clarifying language 
to Sec.  405.1885(c)(3) to provide that a matter may be reopened while 
it is pending on appeal before the Administrator.
    Comment: Two commenters suggested that, if items within the scope 
of a reopening notice are not in fact revised, and therefore, are not 
appealable (because the time to appeal the original NPR has expired), 
providers will be forced to file concurrent appeal and reopening 
requests in order to protect their appeal rights. Another commenter 
noted that its intermediary had denied reopening requests solely on the 
basis that an appeal existed for that year. The commenter wanted 
intermediaries to be informed that an existing appeal before the Board 
should not be a factor in considering whether or not to accept or deny 
a reopening request for the same issues.
    Response: Where an intermediary has issued a notice of reopening, 
the provider should not assume that matters within the scope of the 
reopening will in fact be revised. Therefore, to the extent that the 
appeal period has not already run by the time that the provider 
receives the reopening notice, the provider should file an appeal if it 
wishes to preserve the right to appeal matters covered by the notice of 
reopening. (If the time to appeal has already expired by the time the 
provider receives the notice of reopening, the only way in which the 
provider may appeal a matter addressed in the notice of reopening is if 
the matter is specifically revised in a revised determination issued 
after the notice of reopening.) With respect to the second commenter's 
point, and with respect to reopenings that are within an intermediary's 
discretion (that is, CMS has not directed the intermediary to reopen or 
not to reopen), we agree that an intermediary should not, as a matter 
of course, deny a request to reopen and revise an item simply because 
the item is already the subject of an appeal. However, we do not agree 
that the existence of an appeal or of an appeal right should never be 
taken into consideration by an intermediary in deciding whether to 
reopen. Rather, the intermediary should evaluate the totality of the 
circumstances surrounding the reopening request and decide whether it 
wishes to reopen.
    Comment: Two commenters cited the 7th Circuit decision in Edgewater 
Hospital v. Bowen, 857 F.2d 1123 (7th Cir. 1989), as justification for 
their opposition to our proposal limiting a provider's right to appeal 
matters stated in a notice of reopening, but not addressed in a revised 
determination. One of the commenters agreed with a statement made by 
the court that ``[i]t simply is nonsense to argue that the

[[Page 30231]]

only matters which the provider can appeal are those actually changed 
by the intermediary.'' The other commenter suggested that we 
erroneously misread the Edgewater decision, asserting that our attempt 
to overrule binding judicial precedent was without legal authority.
    Response: In the proposed rule (69 FR 35741 through 35742), we 
explained that the Edgewater decision, in which the court held that the 
provider was entitled to appeal issues that were within the scope of 
the reopening notice, but were not subsequently revised in the revised 
NPR, was based on the court's reading of the regulations. We also noted 
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 the items from the original NPR). The court of appeals 
indicated that its decision may have been based in part on fairness 
concerns.
    We believe that our existing regulations were clear that only if a 
matter is actually revised as a result of a reopening may that matter 
be appealed through an appeal of the revised determination. 
Nonetheless, we believe that we have addressed the Edgewater court's 
concerns in this final rule by: (1) The language in new Sec.  
405.1887(b) and new Sec.  405.1889(b) (both of which explicitly state 
that a matter that was a subject of a reopening notice but not 
subsequently revised may not be appealed through an appeal of the 
revised determination); and (2) putting providers on explicit notice 
that if they wish to appeal an issue that is contained in an NPR, they 
should file a timely appeal from that NPR and not assume that the issue 
will be resolved in a revised NPR (even if the issue is addressed in a 
notice of reopening). For the sake of clarity, wherever the proposed 
text stated that a determination or decision was final and binding 
unless appealed ``or reopened,'' we have revised the language to read 
``or reopened and revised.''
    As courts have noted, the reopening procedures are strictly a 
creature of the Secretary's regulations, and are not required, or 
specifically authorized, by statute. See HCA Health Servs. of Oklahoma 
v. Shalala, 27 F.3d 614, 618 (D.C. Cir. 1994) and Albert Einstein Med. 
Ctr. v. Sullivan, 830 F. Supp. 846, 851 (E.D. Pa. 1992), aff'd 6 F.3d 
778 (3d Cir. 1993). We acknowledge that the Edgewater decision was 
based in part on Bethesda and the statutory language. (See Edgewater, 
857 F.2d at 1132-34.) We also note, however, that the Edgewater court's 
reasoning was specifically rejected by the Ninth Circuit in French 
Hospital Medical Center v. Shalala, 89 F.3d 1411, 1417 (1996), which 
relied on the Medicare regulations. (Id. at 1420 n. 11.) In designing 
the reopening procedures, we have chosen, as is our prerogative, to 
extend appeal rights only to those matters actually revised following a 
reopening. Although Edgewater stated that it was ``illogical'' that the 
plaintiff in the case before it would wish to appeal only the matter 
that was actually revised and not others that were contained in a 
notice of reopening, 857 F.2d at 1137, the issue is not what a provider 
wishes to appeal. Rather, the issue is what a provider should be 
allowed to appeal. The statute gives a provider the right to appeal 
matters covered by an initial intermediary determination if the amount 
in controversy requirement is met and the provider timely requests a 
Board hearing. If the provider does not pursue its statutory appeal 
right with respect to a certain item, it loses its right to appeal that 
item. That right may be resuscitated if that item is actually revised 
in a revised determination, because, under our longstanding policy, the 
revised determination is considered a separate and distinct 
determination to which the intermediary and Board appeals procedures 
(including the amount in controversy and timely request for hearing 
requirements) apply. If an item is not actually revised, however, there 
is no need to extend appeal rights to that matter simply because it was 
mentioned in a notice of reopening. Courts that rejected providers' 
arguments that the issuance of a revised determination subjected the 
entire cost report to appeal did so on the basis that the statutory 
deadline for appealing matters would be defeated. (See Anaheim Mem. 
Hosp. v. Shalala, 130 F.23 845, 852 (9th Cir. 1997) and HCA Health 
Services of Oklahoma v. Shalala, 27 F.3d at 620-21 (and cases cited 
therein)). If we were to allow an appeal of a matter that is addressed 
in a notice of reopening but not actually revised, there similarly 
would be a frustration of the statutory deadline for appealing. A 
matter that is addressed in a reopening, but not revised, remains just 
as administratively final as an item not addressed in a notice of 
reopening. To illustrate, suppose a provider claims a certain amount of 
interest in connection with a borrowing, and the intermediary denies 
the claim on the basis that the borrowing was unnecessary. If the 
intermediary later issues a notice of reopening and the interest issue 
is addressed in the notice of reopening, the intermediary does not send 
a check to the provider along with the notice of reopening. To the 
contrary, the claim for the interest remains denied until such time, if 
ever, there is a revision to the intermediary's original adjustment. 
Apart from traditional notions of administrative finality, there are 
practical reasons for not structuring the reopening procedures to allow 
an appeal of a matter that is addressed in a notice of reopening but 
not subsequently revised. One court noted that allowing the entire cost 
report to be subject to appeal based on a reopening notice would 
discourage the Secretary from reopening determinations for fear of 
being forced to endure a lengthy appeals process on extraneous issues. 
Albert Einstein Med. Ctr. v. Sullivan, 830 F. Supp. at 851. Similarly, 
if intermediaries knew that they would have to commit resources to 
defending appeals on matters that are addressed in a notice of 
reopening but not revised, they may be reluctant to broaden the scope 
of the notice of reopening. In this regard, we note that there are time 
limits on issuing a notice of reopening, and intermediaries should be 
encouraged, rather than discouraged, to include matters in a notice of 
reopening, even if a closer examination of the matters later may reveal 
that no revision is appropriate, in order to preserve the opportunity 
to make revisions.
    Comment: Some commenters suggested that there are cases where the 
intermediary denied valid reopening requests and believe CMS should 
have the authority to ascertain whether the intermediary complied with 
CMS policy.
    Response: We retain the authority to direct intermediary 
reopenings; therefore, we may require an intermediary to reopen a 
determination of that intermediary where we believe it is appropriate 
(and the time for reopening has not expired).
    Comment: Several commenters objected to the proposal that an 
intermediary denial of a reopening request would not be subject to 
further review. In particular, commenters suggested that a provider 
should be entitled to a Board hearing under Sec.  405.1835(a) if an 
intermediary refuses to reopen when the rules and regulations require 
the intermediary to do so. It was also suggested that intermediaries 
have denied reopenings in the past because of personal bias.
    Response: Our longstanding policy is that a ``decision'' to reopen 
or not reopen is not subject to further

[[Page 30232]]

administrative or judicial review. (See Your Home Visiting Nurse 
Services, Inc. v. Shalala, 525 U.S. 449 (1999).) We decline to change 
our policy. With respect to the suggestion that Board review should be 
available where an intermediary refuses to reopen, despite the fact 
that the regulations require the intermediary to do so, the reopening 
rules as amended require intermediaries to reopen only when directed by 
CMS to do so. We do not anticipate that intermediaries will fail to 
comply with a CMS directive to reopen. We have no direct or indirect 
knowledge of any case where an intermediary denied a reopening due to 
an alleged personal bias. We suggest that if a provider believes that 
an intermediary has refused to reopen based on a bias against the 
provider, the provider should contact CMS. We can investigate any 
allegations made by a provider, determine if they are in fact 
supportable and, if so, take appropriate action against the 
intermediary. CMS could, if appropriate, also direct a reopening.
    Comment: Two commenters suggested that because an intermediary must 
provide written notice of its intention to reopen, it should provide 
notice quickly; that is, within 30 days of the provider's reopening 
request. One of these commenters also suggested that all reopened cost 
reports should be settled within 180 days of receipt of the information 
necessary to resolve the case.
    Response: Although we encourage intermediaries to react to provider 
requests for reopening as quickly as possible, it would be impractical 
to have mandated timeframes regarding notices of intention to reopen. 
Intermediaries have very large workloads and cannot be expected to give 
immediate attention to each and every provider's written request for 
reopening. Moreover, as is the case with many reopening requests, an 
intermediary must often ask a provider to submit additional 
documentation in support of the provider's allegations. Thus, we do not 
believe that it is advisable to compel an intermediary to furnish an 
expedited notice of reopening following a request made by a provider. 
We expect that intermediaries, within a reasonable time, will either 
issue a notice of reopening that meets the requirements of Sec.  
405.1887, or notify the provider that the intermediary declines to 
reopen.
    Also, due to an intermediary's large workload of cases and the 
highly technical nature of the cost report and audit process, we do not 
believe it would be prudent to set timeframes on an intermediary for 
the resolution of a reopened cost report. (The requirement that a 
reopened cost report be resolved within a certain time may serve to 
discourage an already overtaxed intermediary from granting a reopening 
request.) Again, we note that intermediary reopenings are discretionary 
and, therefore, a provider reopening request should not be equated with 
a timely filed provider appeal request, where timeframes for action are 
clearly established. We suggest that if a provider believes an 
intermediary is purposely stalling or is acting in an improper manner 
relative to a reopening request, the provider should contact CMS so 
that we can determine if the activity is inappropriate and whether 
action should be initiated against the intermediary.
    Comment: One commenter opposed our proposal to allow an 
intermediary to unilaterally reopen items on a cost report that are on 
appeal before the Board. The commenter suggested that we provided no 
rationale for this policy and cited longstanding Medicare policy that, 
once the Board accepts jurisdiction over an appeal, only the Board 
should be involved in making any further determinations on that 
appealed issue. The commenter believes that if the intermediary reopens 
while an appeal is pending before the Board, the Board could suspend 
the case, which would result in a slowing down of the appeals process 
and an exacerbation of the Board's backlog. The commenter recommended 
that an intermediary should reopen an issue currently pending at the 
Board only for purposes of implementing an administrative resolution of 
that issue. Another commenter suggested that allowing the intermediary 
to reopen an issue under appeal before the Board has the effect of 
circumventing the Administrator review process. The commenter suggested 
that if the intermediary reopens, the provider would drop the issue at 
the Board and the Administrator would not have the opportunity to 
adjudge the issue. Another commenter suggested that it is overly 
burdensome to require an intermediary, during the course of an appeal, 
to notify the Board that a reopening has occurred for an issue that is 
under appeal. The commenter suggested that the provider is the proper 
entity to notify the Board when an intermediary reopens during an 
appeal.
    Another commenter suggested deletion of the proposal that an 
intermediary may reopen a determination for which the time to appeal to 
the Board has not yet expired. This commenter believed the proposal 
serves no purpose, because a cost report can be reopened anytime within 
3 years of the date of the intermediary's determination.
    Response: We disagree with the commenters that suggested that an 
intermediary should not be permitted to reopen a determination that is 
being appealed to the Board. We acknowledge that some intermediaries 
previously would not reopen a determination during the pendency of an 
appeal. However, we believe that reopening in this instance is 
justified because of the large volume of work at the Board and the long 
delays in having cases heard and resolved. Moreover, we are not aware 
of any legal requirement that would prohibit an intermediary from 
reopening in this situation. Although we do not expect intermediaries 
to use this authority frequently, we believe that an intermediary's 
ability to reopen a determination while a case is before the Board or 
the Administrator may, in fact, hasten the resolution of the case. We 
therefore disagree with the commenter that suggested that the appeals 
process would necessarily be slowed if the intermediary reopened prior 
to the case being heard. In fact, the reopening could produce a 
complete resolution of one or all of the issues before the Board or the 
Administrator.
    We disagree with the commenter that suggested that a reopening by 
an intermediary while a case is pending before the Board would 
effectively circumvent the Administrator review process. First, the 
reopening could very well be favorable to a provider, in which case the 
provider would have no desire to seek Administrator review. Second, we 
note that any revision to a determination following a reopening may 
(depending on the amount in controversy remaining) trigger new appeal 
rights for a provider regarding the revision. If a provider elects to 
appeal a revised determination following a reopening, the appealed 
issue(s) may ultimately return to the Board and the Administrator for 
resolution.
    We also disagree with the commenter that suggested that a provider, 
rather than an intermediary, is the proper party to notify the Board 
when the intermediary reopens during the course of a Board appeal. 
Regardless of any possible administrative burden, because the 
intermediary is the party that initiates a reopening, we believe the 
intermediary has an affirmative duty to notify not only the provider of 
the reopening, but also the reviewing entity.
    Finally, we disagree with the commenter that suggested that we 
delete proposed Sec.  405.1885(c)(4), which permits CMS or an 
intermediary to reopen a determination for which the

[[Page 30233]]

time to appeal to the Board has not expired and no appeal has been 
filed. Although the commenter is correct that a cost report can be 
reopened anytime within 3 years of the date of the determination, our 
previous policy was unclear as to whether an intermediary could indeed 
reopen during the appeals period timeframe. Therefore, we believed a 
clarification was needed to inform the intermediaries that they have 
the authority to reopen a determination in the appeal period following 
the issuance of the determination.
    Comment: One commenter suggested that an intermediary should be 
allowed to reopen a determination that is pending on appeal before the 
Administrator.
    Response: The preamble to the proposed rule stated specifically 
that the intermediary had such authority (69 FR 35741). We have made 
corresponding changes to the regulations text at Sec.  405.1885(c)(3) 
to make clear that a reopening may also be initiated while a case is on 
appeal before the Administrator.
    Comment: One commenter noted that the proposed regulations text at 
Sec.  405.1885(b)(3) states that ``no determination may be reopened 
after the 3-year period,'' unless fraud or similar fault is involved. 
The commenter suggested that the text does not comport with the 
preamble comments which permit the intermediary to reopen after the 3-
year period if the request for reopening is received by the 
intermediary towards the end of the 3-year period. Another commenter 
fully supported our proposal clarifying that a provider's request to 
reopen is timely even if received by the intermediary near the end of 
the 3-year deadline.
    Response: We did not include regulations text language that would 
permit expressly an intermediary to issue a notice of reopening after 
the expiration of the 3-year reopening period when the request for 
reopening is received shortly before the expiration of the 3-year 
period. Accordingly, we are modifying language at Sec.  405.1885(b)(2) 
to comport the text of the regulations with our proposed policy.
    Comment: A commenter suggested that we should define ``fraud or 
similar fault,'' because it can be interpreted in many different ways. 
The commenter suggested that ``fraud'' should be defined as an 
intentional deception harming the government and resulting in a 
criminal conviction. ``Similar fault'' should be defined as an 
intentional deception harming the government and resulting in a 
judgment in a civil proceeding.
    Response: We disagree that we need to define ``fraud or similar 
fault'' so that an intermediary will be able to better ascertain 
whether a determination may be reopened after the expiration of the 3-
year reopening period. The term ``fraud or similar fault'' was inserted 
as original language in our reopening regulations, and we are not aware 
that intermediaries have had any problem in interpreting its meaning. 
Without defining the term in regulation, we note that when the 
intermediary invokes ``fraud'' as the reason for reopening beyond the 
3-year period, the intermediary has concluded that the determination 
under review was procured by: (1) An intentionally false oral or 
written representation of a matter or fact; or (2) by concealment of a 
matter that should have been disclosed. On the other hand, ``similar 
fault'' covers determinations that do not rise to the level of fraud. 
For instance, an intermediary could find that a provider received money 
that it knew or reasonably should have known it was not entitled to 
retain.
    Comment: A commenter suggested that a provider not be allowed to 
add issues to a reopening request after the 3-year period has expired.
    Response: We note that current Medicare policy prohibits a provider 
from adding issues to a reopening request after the 3-year period has 
expired. Reopenings are issue specific; therefore, if a provider 
receives an NPR that pertains to issues A and B, and it requests a 
reopening on issue A within the 3-year limit, if it desires the 
intermediary to reopen issue B, it must also request a reopening of 
that issue within the 3-year period. Requesting a reopening for one 
issue does not, whether the intermediary is considering the request, 
has granted the request, or has issued a revised determination, toll 
the time for requesting a reopening for any other issue.
    Comment: A commenter suggested that a provider would be required 
only to have ``reasonable'' accompanying documentation in support of a 
request for reopening, so that the intermediary, after the 3-year 
period has expired, could not deny the request due to insufficient 
support. According to the commenter, the intermediary should also be 
afforded a specific amount of time either to request additional 
documentation from the provider or to decide whether it wishes to 
reopen.
    Response: We are not prescribing by regulation any particular 
documentation or evidence that needs to accompany a reopening request. 
Therefore, any request that is received by the intermediary within the 
applicable 3-year period and puts the intermediary on fair notice as to 
the matter or matters for which the provider is seeking reopening 
(including identifying the determination at issue) should satisfy the 
minimum requirements for requesting a reopening. Because it is within 
the intermediary's discretion whether to grant a request to reopen, 
however, a provider should strive to present the best case possible in 
support of its request to reopen, which may necessitate, in some cases, 
sending documentation or other evidence to the intermediary. Because of 
the large volume of work that the intermediaries process, we decline to 
impose specific timeframes on the intermediaries for the resolution of 
provider reopening requests.
    Comment: One commenter wanted to know whether, if an intermediary 
reopens and revises a particular issue on a cost report, that issue 
would be subject to another 3-year reopening period.
    Response: If an intermediary reopens and revises an issue in a cost 
reporting year, the revision may be appealed in accordance with Sec.  
405.1889. Moreover, a new 3-year reopening period would apply to the 
revised issue. Any issue not revised following a reopening does not 
carry with it any further appeal rights or a new reopening period with 
regard to that issue.
    Comment: One commenter suggested that the reason that issues are 
added to Board cases (subsequent to the initial request for hearing) is 
that the reopening provisions have not been fairly applied in the past. 
The commenter suggested that the proposed rule reduces the amount of 
discretion intermediaries have in granting reopenings by prohibiting 
intermediaries from reopening issues based on a change in legal 
interpretation or policies.
    Response: We disagree with the commenter. We believe that the 
reopening process is fair. We acknowledge that, because of the wide 
discretion intermediaries have in deciding whether to reopen or not to 
reopen, one intermediary may decide differently on a given provider 
reopening request than another intermediary would based on similar 
facts. Because reopenings are discretionary, rather than rely upon a 
reopening request being granted, providers should preserve their appeal 
rights by including in their request for hearing all issues that they 
believe were wrongly decided. Finally, we note that, as explained in 
the August 1, 2002 final rule (67 FR 50096), it has always been 
Medicare's policy to prohibit intermediaries from reopening based on

[[Page 30234]]

a change in legal interpretation or policy.
    Comment: One commenter suggested that we incorrectly cited to two 
court decisions (Foothill Presbyterian Hospital v. Shalala, 152 F.3d 
1132 (9th Cir. 1998) and HCA Health Services of Oklahoma, Inc. v. 
Shalala, 27 F.3d 614 (D.C. Cir. 1994)) when we proposed that the scope 
of appeal of a revised determination is limited to the specific 
revisions that were made in the determination. The commenter suggested 
that we are improperly attempting to alter through regulations the 
scope of the Board's jurisdiction, and that the Board is clearly able 
to define its own scope of jurisdiction, without interference by CMS.
    Response: We disagree with the commenter. Our longstanding 
reopening policy, as contained in the regulations (that were, in fact, 
published prior to the formation of the Board) (see Sec.  405.1889), 
specifies that the scope of appeal of a revised determination is 
limited to the specific revisions that were made in the revised 
determination. We cited the cases of Foothill Presbyterian Hospital v. 
Shalala and HCA Health Services of Oklahoma, Inc. v. Shalala as 
examples of court decisions that agreed that the scope of a provider's 
appeal of a revised determination is limited to the issues that were 
specifically revised. (We note that in those cases, the courts were not 
presented with the factual situation in which the provider was 
attempting to appeal, through an appeal of a revised NPR, a matter that 
was addressed in a reopening notice but not subsequently revised.) The 
Board has jurisdiction only over final determinations made by an 
intermediary or the Secretary, and only matters specifically revised 
are part of a final determination.
    Comment: One commenter noted that there were no deadlines imposed 
on intermediaries to process reopening requests and issue revised 
determinations. The commenter suggested that it is unreasonable to have 
reopenings pending for more than a year, and recommended that we 
require intermediaries to complete their actions within 1 year of the 
date of the notice of reopening.
    Response: As we stated previously, it would be inappropriate for us 
to require intermediaries to resolve reopening requests under strict 
time constraints. We cannot accurately gauge intermediary workloads 
(reopening requests comprise only a fraction of the workload) and, 
therefore, we cannot mandate specific timeframes for intermediaries in 
their processing of provider reopening requests.

W. Three Additional Proposals Under Consideration

    In the proposed rule, we stated that we were considering amending 
the regulations on three matters that did not surface until very late 
in the development of the rule. They are as follows:
     An ex parte contact with a Board staff member concerning a 
procedural matter in a case should not be considered a prohibited ex 
parte communication.
     Upon receipt of a credible allegation that a party's 
counsel has a conflict of interest in the party's representation, the 
Board would be able to order the party to show cause why the case 
should not be dismissed or why other appropriate action should not be 
taken.
     Where an intermediary denies reimbursement for a claimed 
item without auditing the reimbursement effect of that claim, and the 
intermediary's denial is reversed by the Board, the Administrator, or a 
court (making the decision final and non-appealable), we may require 
the intermediary to determine the reimbursement effect of the claim 
prior to payment.
    We are adopting the proposals. Specifically, we have added Sec.  
405.1868(f) to state that ex parte communications with Board staff 
concerning procedural matters are not prohibited. We added Sec.  
405.1868(g) to provide that upon receipt of a credible allegation that 
a party's representative has divulged to that party or to the Board 
information that was obtained during the course of the representative's 
relationship with an opposing party and that was intended by that party 
to be kept confidential, the Board will investigate the allegation. 
Where the Board determines that it is appropriate to do so, it may take 
remedial action against the party or the representative (such as 
prohibiting the representative from appearing before it, excluding such 
information from the record, or if the overall fairness of the hearing 
has been compromised, dismissing the case). We amended Sec.  
405.1803(d) to state that CMS may require the intermediary to audit any 
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 that 
section. We added Sec.  405.1831(e) and Sec.  405.1871(b)(4), and 
amended Sec.  405.1875(f)(5), to provide that, where the intermediary's 
denial of the relief that the provider seeks before the intermediary 
hearing officer(s), the Board or the Administrator was based on 
procedural grounds (for example, the alleged failure of the provider to 
satisfy a time limit) or was based on the alleged failure to supply 
adequate documentation to support the provider's claim, and the 
reviewing entity rules that the basis of the intermediary's denial is 
invalid, the reviewing entity will remand to the intermediary for the 
intermediary to make a determination on the merits of the provider's 
claim.
    Comment: In response to our proposal to explicitly state that ex 
parte communications with Board staff concerning procedural matters are 
not prohibited ex parte communications, we received one comment, which 
was in favor of its adoption.
    Response: We are adopting the proposal as new Sec.  405.1868(f). 
Although ex parte communications concerning procedural matters are not 
prohibited, we strongly encourage parties to avoid them wherever 
possible. That is, a party should strive to copy the other party(ies) 
on any written correspondence with Board staff, and, where oral 
communication with Board staff is to take place, to include the other 
party(ies) (for example, joining them in a conference call), or, where 
it is not practical to do so, immediately convey the substance of the 
oral conversation to the other party(ies).
    Comment: We received two comments on our proposal to give the Board 
the authority to order a party to show cause why it should not dismiss 
an appeal or take other action where the Board has credible evidence 
that the party's counsel may have a conflict of interest. One commenter 
was in favor of the proposal, whereas the second commenter stated that 
there was no legitimate basis for dismissing a provider's appeal due to 
a potential or even actual conflict on the part of the provider's 
representative, and the Board would have no legal authority to take 
punitive action against the provider. In addition, the latter commenter 
stated that the suggestion in the proposal that a conflict arose from 
any use of information obtained from another party while in that 
party's employ is overbroad and inappropriate because it fails to 
consider circumstances in which the information was not, or was not 
intended to be kept confidential, or in which disclosure was expressly 
permitted by the party from whom the information was obtained.
    Response: Our proposal stemmed from our recognition that, not 
infrequently, persons well-versed in Medicare reimbursement may switch 
from being a provider representative to

[[Page 30235]]

an intermediary representative, or vice versa. In that situation, it 
would be inappropriate for a representative to use any confidential 
information obtained during the course of his or her former employment. 
By ``confidential information,'' we mean information that the 
representative is not authorized to disclose. We disagree that the 
Board would not have the authority to dismiss an appeal in a case in 
which it determines that the provider representative has a conflict of 
interest. The Board historically has had plenary power to dismiss 
appeals, even in the absence of a regulation so authorizing, for 
violation of procedural rules, such as the time in which to file a 
position paper. (See, for example, Novacare, Inc. v. Thompson, 357 F. 
Supp. 2d 268 (D.D.C. 2005)). We believe that we have the authority to 
allow the Board to dismiss an appeal, if the overall fairness of the 
hearing has been compromised, or take other appropriate action, based 
upon a determination by the Board that a provider representative or an 
intermediary representative has engaged in misconduct. We have adopted 
our proposal as new Sec.  405.1868(g).
    Comment: We received six comments on our third additional proposal. 
We received two comments on our specific proposal that, where an 
intermediary denies reimbursement without auditing the effect of the 
denial, and that determination is later reversed by a final decision of 
the Board, the Administrator or a court, CMS may require the 
intermediary to determine the reimbursement effect of the claim prior 
to payment. We noted that this proposal was similar to our proposal for 
auditing self-disallowed costs that are ultimately allowed. We received 
one comment in favor of this proposal and one comment questioning the 
scope of the audit. The latter commenter asked in particular what the 
scope of the audit would be in the example cited in the proposed rule 
concerning an exception to a provider's ESRD payment rate. The same 
commenter also asked what the scope of an audit would be in the case in 
which a provider successfully appeals the issue of whether Medicaid 
eligible days should be included in the numerator of the Medicaid 
fraction component of the DSH calculation. That is, would the scope of 
the audit be restricted to only the Medicaid eligible days issue, or 
would the intermediary be permitted to look at other potential DSH 
issues such as total days?
    Response: We are adopting this part of the proposal at Sec.  
405.1803(d)(3). The scope of the audit will be determined by CMS (in 
accordance with the decision of the reviewing entity) and will be based 
on the particular issue(s) before the reviewing entity or the court. 
The purpose of the audit will be to determine the reimbursement impact 
of the issue(s) decided by the reviewing entity or court; the purpose 
is not to make additional adjustments or to reach other issues that 
were not appealed by the provider.
    Comment: We received four comments on our related proposal that, 
where an intermediary or CMS determines that reimbursement for an item 
should be disallowed on one basis and that determination is later 
reversed, the intermediary should then have the opportunity to 
determine whether reimbursement should be denied for any other reason. 
We stated that it is potentially a waste of resources for a decision 
maker to consider all possible reasons why an item or request (for 
example, a provider's request for an exception to its ESRD payment 
rate) would not be allowed where the intermediary has a good faith 
belief that its determination is correct, and given that the 
determination may never be challenged or, if challenged, may be upheld. 
One commenter stated that this proposal, along with the greater body of 
proposed amendments, is designed to have a chilling effect on the 
willingness and capacity of providers to appeal legitimate concerns. 
Another commenter stated that providers expend great resources in 
preparing for an appeal, and that allowing intermediaries to create new 
arguments, even after a decision from the Board, would simply lead 
providers to forego meritorious appeals simply because the intermediary 
had greater resources than the provider. The appeals process would be 
futile if a provider could not ever obtain final relief due to the 
intermediary's repeated use of delay tactics. The third commenter was 
concerned that this proposal, if adopted, could be interpreted to allow 
CMS or the intermediary to re-challenge an issue following a Board 
decision, as long as the basis for the challenge was not originally 
raised. All issues related to a dispute should be considered in the 
appeal at the same time. The fourth commenter stated that the 
intermediary has full opportunity to raise whatever objections it has, 
with respect to a claimed cost, in connection with its audit and review 
of the provider's submitted cost report. In the event of an appeal, the 
intermediary has another opportunity to change or supplement its 
position in proceedings before the Board. The intermediary should not 
have a third or potentially endless opportunity, even after a final 
administrative or judicial decision on an appeal, to deny payment for 
reasons not raised before and outside of the usual 3-year reopening 
period. According to the commenter, this proposal is grossly unfair to 
providers, particularly in view of the fact that CMS holds the amount 
in controversy from the time an intermediary effects a disallowance 
until an appeal is resolved, and is contrary to the Secretary's 
purported concern about the backlog of pending appeals.
    Response: We agree that intermediaries should not be able to delay 
indefinitely the resolution of an issue on appeal by making an endless 
series of objections. Our proposal was not designed to prolong 
unnecessarily cases before the Board or to discourage providers from 
pursuing appeals. Rather, it was intended to address the difficulties 
that intermediaries and CMS face in allocating a finite amount of 
resources among their many responsibilities. We continue to believe 
that, in the situation in which an intermediary makes a good faith 
determination that the provider is not entitled to the relief it seeks 
because it has failed to satisfy a condition that is a necessary 
prerequisite to that relief, it makes little sense for the intermediary 
to devote its resources to exploring whether the provider meets other 
necessary conditions for the relief it seeks. For example, if an 
intermediary determines that a provider is not entitled to claim an 
item because it failed to meet a statutory or regulatory deadline, the 
intermediary should not have to spend resources in determining whether 
the provider met the substantive requirements for entitlement to the 
item, to guard against the possibility that a court may declare the 
denial invalid. (Our proposal was motivated in part by the actual 
situation in which an intermediary disallowed a provider's claim for a 
loss on depreciation because the underlying transaction took place 
after December 1, 1997. The provider subsequently argued that the 
transaction took place prior to December 1, 1997, due to a special law 
enacted by the State legislature in 1998 to address specifically the 
transaction at issue, and also argued that our regulation interpreting 
the statute as preventing claims for losses on depreciation for 
transactions that occurred on or after December 1, 1997 was invalid. 
The provider indicated that it would argue to a court that, if it was 
successful in its claim that the transaction was timely, the 
intermediary should be prevented from arguing that the provider did not 
satisfy the

[[Page 30236]]

substantive requirements for claiming a loss on depreciation. The claim 
at issue involved approximately $30 million in Medicare reimbursement.) 
Likewise, if an intermediary determines that a provider has not met a 
clearly prescribed documentation requirement, and the Board agrees, but 
the provider is successful in convincing the Administrator or a court 
to overturn the Board's decision, the provider should not simply be 
awarded the reimbursement without the intermediary having the 
opportunity to determine whether the provider was entitled to it on the 
merits. We are adopting the proposal, but are limiting its 
applicability to the situation in which the intermediary makes an 
adjustment on the cost report, or otherwise denies the relief the 
provider seeks, for procedural reasons (for example, the alleged 
failure to meet a deadline) or lack of documentation. Where the 
reviewing entity disagrees with the basis for the denial, it must 
remand the case to the intermediary for a determination on the merits. 
We are adding new paragraph (e) to Sec.  405.1831 and new paragraph 
(b)(4) to Sec.  405.1871 and are amending Sec.  405.1875(f)(5) to 
effectuate the finalized proposal.

X. Technical Revisions

    We proposed certain technical revisions to the following sections: 
Sec.  413.30(c)(1), Sec.  413.30(c)(2), Sec.  413.40(e)(5), Sec.  
413.64(j)(1), Sec.  417.576, and Sec.  417.810. We received no comments 
on our proposed technical revisions and are adopting them as proposed. 
We note that we inadvertently failed to include regulations text for 
our proposed revision to Sec.  413.30(c)(2) and have corrected that 
omission in this final rule.

Y. Effective Date

    This section is new. We proposed no specific effective date, but 
two commenters made suggestions for an effective date.
    Comment: One commenter said that the effective date for the final 
rule should be for cost reporting periods beginning on or after at 
least 3 months after the rule is published in the Federal Register. In 
the alternative, the final rule should be effective with respect to 
cost reports, reopenings, and appeals filed, requested, or issued on or 
after at least 9 months after the rule is published in the Federal 
Register. Providers need time to put into effect, digest, and react to 
the massive changes in approach set forth in this final rule. Another 
commenter said that the final rule should not be applied retroactively 
to pending appeals. Particularly troublesome would be an application of 
the rules that would prohibit a provider from adding issues to an 
appeal more than 60 days after the filing deadline for the appeal. A 
retroactive application of the new 60-day limit would violate the due 
process rights of providers whose otherwise valid claims would be 
extinguished by a retroactive regulation. Even ``grandfathering'' 
current appeals would prejudice some providers. For example, if the 
proposals on requesting an extension of the time to request a Board 
hearing were effective upon the issuance of a final rule, providers 
that have relied on their ability to receive good cause for an 
extension to file an appeal may be barred from bringing the appeal if 
it is determined that the amount of time that has passed since the 
issuance of their NPR is longer than the ``reasonable time'' to file 
the appeal. The final rule, if enacted as proposed, would violate a 
provider's rights by changing the rules of procedure in the middle of 
the appeal process. The commenter recommended that we issue an interim 
final rule, which would not apply to currently pending appeals or to 
currently existing claims that could give rise to an appeal. Use of an 
interim final rule would allow the public an opportunity to comment on 
an appropriate effective date.
    Response: We do not agree that it is necessary to make the rule 
effective for cost reporting periods beginning at some point after the 
effective date of the rule, or that it is necessary to publish this 
rule as an interim final rule or a final rule with comment. Although 
the proposed rule was published on June 25, 2004, giving providers 
adequate notice of the potential provisions of the final rule, we are 
taking certain precautions to ensure that no provider is disadvantaged 
by the timing of our procedural changes. First, the rule is generally 
effective 90 days after publication in the Federal Register. Second, we 
are providing special rules for adding issues to appeals pending as of 
the effective date, and for requesting an extension of time, for good 
cause, of the date to seek a Board or intermediary hearing officer 
hearing. For appeals pending before an intermediary hearing officer(s) 
or the Board prior to the effective date of this rule, a provider that 
wishes to add one or more issues to its appeal must do so by the 
expiration of the later of the following periods: (1) 60 days after the 
expiration of the applicable 180-day period prescribed in Sec.  
405.1811(a)(3) (for intermediary hearing officer hearings) or Sec.  
405.1835(a)(3) (for Board hearings); or (2) 60 days after the effective 
date of this rule. For appeals filed on or after the effective date of 
this rule, the provisions of Sec.  405.1811(c) and Sec.  405.1835(c) 
apply. With respect to requests for good cause extensions under Sec.  
405.1813 (intermediary hearing officer hearings) and Sec.  405.1836 
(Board hearings), providers that have not filed a timely appeal as of 
the effective date of this rule and that wish to seek an extension of 
the time limit for filing an appeal based on good cause, have an 
additional 60 days after the effective date of this rule to seek an 
extension without meeting the ``reasonable time'' requirements of 
revised Sec.  405.1813 and Sec.  405.1836 (but must meet all other 
requirements of those sections). Finally, and as noted above in section 
II.D.1. of this final rule, the requirement that a provider must self-
disallow 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, is effective for cost reporting periods ending on or 
after December 31, 2008.

Z. Children's Health Graduate Medical Education Program (CHGME)

    This section is new. We made no proposals specific to appeals 
involving the CHGME program, but received one comment.
    Comment: One commenter noted that our proposed rule did not address 
appeals that may be filed by children's hospitals under the CHGME 
program. The commenter stated that any appeal under the CHGME program 
must be placed on a ``fast track'' for the Board and the Health 
Resources and Services Administration Administrator. The commenter 
recommended that a specific set of regulations be created to 
specifically address the CHGME program's unique timeframes for appeals.
    Response: The CHGME payment program, as authorized by section 340E 
of the Public Health Service Act, 42 U.S.C. 256e, provides funds to 
children's hospitals to address disparity in the level of Federal 
funding for children's hospitals that results from Medicare funding for 
graduate medical education. Public Law 106-310 amended the CHGME 
statute to extend the program through FY 2005. Under 42 U.S.C. 256e, a 
children's hospital with a CHGME program is a hospital with a Medicare 
provider agreement. Therefore, CHGME appeals are governed by Part 405, 
Subpart J--Expedited Determinations and Reconsiderations of Provider 
Service Terminations, and

[[Page 30237]]

Procedures for Inpatient Hospital Discharges. We do not believe it is 
necessary at this time to issue regulations that are specific to the 
CHGME program. Rather, the Board will schedule and hold hearings on any 
CHGME appeals that may be filed in accordance with the requirements of 
the regulations at 42 CFR Part 405 Subpart R--Provider Reimbursement 
Determinations and Appeals. We note that the statute does not require 
that CHGME appeals be placed on a ``fast track.'' However, the Board 
gives expedited treatment to CHGME appeals, because payments to 
children's hospitals are based on the hospital's share of the total 
amount of direct and indirect Medicare education funding available in 
any Federal fiscal year (FFY). This funding is part of a fixed payment 
pool that is distributed prior to the close of each FFY. As a result, 
appeals before the Board are heard on an accelerated hearing schedule 
so that a provider's reimbursement is accurately determined prior to 
the end of the FFY.

III. Provisions of the Final Rule

    For purposes of this section, we are using the same lettering 
sequence that appeared in the proposed rule and in section II in this 
final rule. In each lettered section, we provide a listing of the 
changes from the proposed rule that we have made in this final rule. A 
detailed description of the proposals is contained in the proposed 
rule, and a detailed explanation regarding the changes appears at 
section II in the preamble to this final rule. Certain Minor technical 
revisions may not be listed in this section III or discussed above in 
section II.

B. Calculating Time Periods and Deadlines (Sec.  405.1801(a) and Sec.  
405.1801(d))

     Section 405.1801(a)--``Date of Receipt'' is revised.
     Section 405.1801(d)--''Calculating time periods and 
deadlines'' is revised.

D. Provider Hearing Rights (Sec.  405.1803(d), Sec.  405.1811, and 
Sec.  405.1835))

     Section 405.1811(a)(1)(ii) and Sec.  405.1835(a)(1)(ii)--
The provisions of these paragraphs are effective for cost reporting 
periods that end on or after December 31, 2007.
     Section 405.1811(b) and Sec.  405.1835(b)--These 
paragraphs are clarified to provide that, where required information is 
not submitted with the hearing request, the intermediary hearing 
officer or Board, as applicable, may dismiss with prejudice the appeal, 
or take any other remedial action that the reviewing entity considers 
appropriate.
     Section 405.1835(c)(3)--We have deleted the language in 
this paragraph pertaining to a request to add issues following a 
reopening.
     Section 405.1811(b)(2)(i) and Sec.  405.1835(b)(2)(i)--We 
have revised the hearing rights criteria in these paragraphs to allow a 
provider to explain why it is unable to determine whether payment is 
correct as a result of not having access to underlying information.
     Section 405.1835(b)(4)--We are adding this paragraph to 
require a provider under common ownership or control to furnish 
additional information regarding its parent corporation and related 
providers, and to provide: (1) A statement that no other provider to 
which it is related has a pending hearing request or appeal on any of 
the same issues contained in the provider's hearing request for the 
relevant timeframe; or (2) a statement that a pending appeal(s) 
exist(s), and the provider name(s) and provider number(s), and the case 
number(s) (if assigned), for such appeal(s).
     Miscellaneous--We have rectified, where appropriate, minor 
wording inconsistencies between Sec.  405.1811, which pertains to 
intermediary hearings, and Sec.  405.1835, which pertains to Board 
hearings.

E. Provider Requests for Good Cause Extension of Time Period for 
Requesting Hearing (Sec.  405.1813 and Sec.  405.1836)

     405.1813(e)(1)--We have made a technical change concerning 
the component within CMS to which intermediary hearing officer 
decisions should be sent.
     Miscellaneous--We have made minor, non-substantive wording 
changes to make Sec.  405.1813 and Sec.  405.1836 consistent, wherever 
possible.

F. Intermediary Hearing Officer Jurisdiction (Sec.  405.1814)

     Section 405.1814(a)(1)(ii)--We have amended Sec.  
405.1814(a)(2) (and Sec.  405.1840(a)(2) relating to Board 
jurisdiction) to explain that the preliminary determination of the 
scope of the reviewing entity's jurisdiction consists of a review as to 
whether the request for hearing was timely and whether the amount in 
controversy has been met.
     Miscellaneous--We made minor technical changes to other 
portions of Sec.  405.1814 and conformed language in Sec.  405.1814 to 
that in Sec.  405.1840, wherever possible.

G. CMS Reviewing Official Procedure (Sec.  405.1834)

     Section 405.1834(d)(2)--This paragraph has been revised to 
provide that the 60-day period for noticing review begins from the date 
of the intermediary hearing officer decision.
     Section 405.1834(e)(2)--We have clarified that the CMS 
reviewing official's review of an intermediary hearing officer decision 
would not be limited to a hearing on the written record if certain 
criteria are met.
     Miscellaneous--We have made technical changes to proposed 
Sec.  405.1834(b), Sec.  405.1834(c) and Sec.  405.1834(e)(3) 
concerning the component within CMS to which intermediary hearing 
officer/CMS reviewing official decisions should be sent.
     Section 405.1834(d)(1)--We clarified language pertaining 
to own motion review by the Administrator.
     Section 405.1834(e)(1)(i)--We have revised Sec.  
405.1834(e)(1) to state that the CMS reviewing official must give great 
weight to ``other interpretive rules, general statements of policy, and 
rules of agency organization, procedure, or practice established by 
CMS.''

H. Group Appeals (Sec.  405.1837)

     Section 405.1837(b)(1)--This paragraph is revised to 
clarify that commonly owned or operated providers must bring as a group 
appeal a specific matter at issue that involves a question of fact or 
interpretation of law, regulations, or CMS rulings that is common to 
providers and that pertains to cost reporting periods ending in the 
same calendar year.
     Section 405.1837(b)(1) and Sec.  405.1837(b)(2)--We have 
revised Sec.  405.1837(b)(1) (with respect to mandatory group appeals) 
and Sec.  405.1837(b)(2) (with respect to optional group appeals) to 
provide that one or more of the providers in the group may, as a matter 
of right, appeal more than one cost reporting period for purposes of 
meeting the $50,000 amount in controversy requirement, and, subject to 
the Board's discretion, may appeal more than one cost reporting period 
that is the subject of the group appeal for other purposes, such as 
convenience. Illustrative examples follow the text of Sec.  
405.1837(b)(1).
     Section 405.1837(b)(3)--This paragraph is revised to 
clarify that, whereas one or more commonly owned or operated providers 
may initiate a mandatory group appeal, at least two providers are 
required to initiate an optional group appeal.

[[Page 30238]]

     Section 405.1837(c)(2)--This paragraph was revised to use 
the term ``item'' rather than ``cost.''
     Section 405.1837(c)(4)(ii), Sec.  405.1837(e)(2), Sec.  
405.1837(d)(3), and Sec.  405.1837(d)(4)--We have revised Sec.  
405.1837(c)(4)(ii) and Sec.  405.1837(e)(2), and have deleted Sec.  
405.1837(d)(4) in order to permit the Board to make jurisdictional 
determinations at any time. We have deleted proposed Sec.  
405.1837(d)(3) to permit the Board to conduct various proceedings prior 
to making jurisdictional findings.
     Section 405.1837(e)(1) and Sec.  405.1837(e)(2)--We have 
deleted certain language in proposed Sec.  405.1837(e)(2) and have 
revised Sec.  405.1837(e)(1) to provide that, with respect to mandatory 
group appeals, absent a notice from the providers that the group is 
fully formed, the Board may issue an order requiring the providers to 
demonstrate that there is at least one commonly owned or controlled 
provider that is a potential addition to the group. With respect to 
optional group appeals, we have revised Sec.  405.1837(e)(1) to provide 
that, absent a notice from the providers that the group is fully 
formed, the Board will issue an order that the group is fully formed or 
will issue general instructions that set forth a schedule for the 
closing of optional group appeals.
     Section 405.1837(e)(2)--This paragraph is revised to 
provide that the Board will not dismiss any group appeal hearing 
request for failure to meet the amount in controversy requirement until 
the Board has determined that the group is fully formed.
     Section 405.1837(e)(5), Sec.  405.1837(e)(6)--We have 
deleted language from proposed Sec.  405.1837(e)(5) that stated that 
the Board must grant a request to join a group appeal if the request is 
unopposed by the group members and is received by the Board prior to a 
final decision by the Board on the appeal. We have revised this 
paragraph to provide that, as a general rule, where a provider has 
appealed an issue through a group appeal, it may not subsequently 
request the Board to transfer that issue to a single provider appeal. 
We provide an exception to the general rule in the case of a group 
appeal that does not meet the jurisdictional requirements where the 
Board determines that the requirements for a group appeal are not met. 
We have moved the language in proposed Sec.  405.1837(e)(6), which 
stated that a denial by the Board of a request to join a group is 
without prejudice to the provider bringing a separate appeal, to Sec.  
405.1837(e)(4). We have also incorporated proposed Sec.  405.1837(e)(7) 
into Sec.  405.1837(e)(4).

I. Amount in Controversy (Sec.  405.1839)

     Section 405.1839(c)(4)--We are adding this paragraph to 
provide that, where a provider has requested a hearing before an 
intermediary and the amount in controversy is subsequently determined 
to be at least $10,000, the appeal will be transferred to the Board. 
Where the amount in controversy changes to an amount less than the 
minimum for a Board appeal due to the settlement, transfer or 
abandonment of an issue, the Board retains jurisdiction. Where the 
amount in controversy changes to an amount less than the minimum for a 
Board appeal due to a more accurate assessment of the amount in 
controversy, the Board will not retain jurisdiction.

J. Board Jurisdiction (Sec.  405.1840)

     Section 405.1840(b)(1)--We have updated the regulatory 
citations to the coverage appeals process and the Quality Improvement 
Organization appeals process.
     Section 405.1840(c)(2) and Sec.  405.1840(c)(3)--In 
paragraph Sec.  405.1840(c)(2) we corrected a citation to a specific 
paragraph of Sec.  405.1842, and in Sec.  405.1840(c)(3), we clarified 
citations to specific paragraphs of Sec.  405.1875.
     For a discussion of other changes we made to Sec.  
405.1840(a)(2), please refer to section III.F. (Intermediary Hearing 
Officer Jurisdiction) above.

K. Expedited Judicial Review (Sec.  405.1842)

     Section 405.1842(e)(3)(ii)--We have revised this paragraph 
to clarify that, upon receiving a request for EJR, the Board will have 
30 days either to issue an EJR decision (if the request is complete) or 
issue a written notice to the provider that the provider has not 
submitted a complete request.

L. Parties to Proceedings in a Board Hearing or Intermediary Hearing 
(Sec.  405.1843 and Sec.  405.1815)

     Section 405.1843(a) and Sec.  405.1815--We have clarified 
in Sec.  405.1843(a) and in Sec.  405.1815 that it is the Board or the 
intermediary hearing officer (and not the intermediary) that determines 
whether an entity is a related organization of the provider, and that 
such a determination is made in accordance with the principles 
enunciated in Sec.  413.17.
     Section 405.1843(b)--We have clarified this paragraph to 
state that, although the Board may call as a witness any employee or 
officer of HHS or CMS having personal knowledge of the facts and the 
issues in controversy in an appeal, the Department's Touhy regulations 
at 45 CFR, Part 2 apply as to whether that employee or officer will 
appear.
     Section 405.1843(e) and Sec.  405.1843(f)--We have added 
Sec.  405.1843(e) to provide that a non-party other than CMS may seek 
leave from the Board to file amicus curiae briefing papers with the 
Board. We have also added new Sec.  405.1843(f) to provide that the 
Board may exclude from the record all or part of an amicus curiae 
briefing paper.

M. Quorum Requirements (Sec.  405.1845)

     Section 405.1845(d)(1) --We have clarified that a quorum 
is not required to issue a dismissal decision, which reflects current 
Board practice.
     Section 405.1845(f)(2), Sec.  405.1845(g) and Sec.  
405.1845(h)--We have made a technical change to proposed Sec.  
405.1845(f)(2), and, for clarity, we have renumbered proposed Sec.  
405.1845(f)(3) as Sec.  405.1845(g), and accordingly have renumbered 
proposed Sec.  405.1845(g) as Sec.  405.1845(h).

N. Board Proceedings Prior to Hearing; Discovery in Board and 
Intermediary Hearing Officer Proceedings (Sec.  405.1853 and Sec.  
405.1821)

     Section 405.1853(b)(2)--We removed the requirement that 
the Board must find ``good cause'' for extending the deadline for 
submitting a position paper.
     Section 405.1853(b)(3)--We clarified that the ``time frame 
to be decided by the Board,'' for purposes of submitting exhibits on 
the merits of the provider's claim, may be through a schedule specific 
to a given case or through general instructions. We also revised this 
paragraph to provide that the general rule, that any supporting 
exhibits regarding jurisdiction must accompany the position paper, is 
subject to a Board order or general instructions to the contrary.
     Section 405.1853(e)(2)(i)--This paragraph has been revised 
to provide that neither CMS, the Secretary nor any Federal agency is 
subject to the Board discovery process. A party may propound written 
interrogatories only to another party, and not to a non-party.
     Section 405.1853(e)(2)(ii)--This paragraph has been 
revised to specifically reference Rule 32(a)(3) of the FRCP governing 
the allowance of depositions in certain circumstances. We have also 
revised this paragraph to provide that the Department's Touhy 
regulations at 45 CFR, Part 2 (Testimony by employees and production of

[[Page 30239]]

documents in proceedings where the United States is not a party) will 
apply as to whether an employee or officer of CMS or HHS will appear at 
a deposition.
     Section 405.1853(e)(3)(i)--This paragraph has been revised 
to provide that (unless the time is extended by the Board), discovery 
requests must be served no later than 120 days before the initially 
scheduled starting date of the hearing.
     Section 405.1853(e)(3)(ii)--This paragraph has been 
revised to clarify language concerning when discovery may be 
``conducted,'' and to provide that, in the absence of an order or 
instruction by the Board setting a schedule for the holding of a 
deposition, a party desiring to take a deposition shall give reasonable 
notice in writing to the deponent of a scheduled deposition, and unless 
the Board orders otherwise, the deposition may not be held any later 
than 45 days before the initially scheduled starting date of the Board 
hearing. Responses to interrogatories or requests for production of 
documents must be served no later than 45 days before the initially 
scheduled starting date of the Board hearing, unless the Board orders 
otherwise. The requirement that the Board must find ``good cause'' to 
extend the period for discovery has been deleted.
     Section 405.1853(e)(3)(iv)--We have deleted the 
requirement that the Board may extend the time to request, conduct, or 
respond to discovery only upon a showing by the requesting party that 
it was not dilatory or otherwise at fault.
     Section 405.1853(e)(3)(v)--We have clarified that, upon 
granting an extension request, the Board has the discretion to 
reschedule the hearing date (without being required to find that such 
rescheduling is ``necessary'').
     Section 405.1853(e)(4), Sec.  405.1853(e)(5)(vii)--We have 
added clarifying language at Sec.  405.1853(e)(5)(vii) to state that 
nothing in Sec.  405.1853 authorizes the intermediary hearing officer 
or Board to compel any action from the Secretary or CMS. Accordingly, 
at Sec.  405.1853(e)(4), we have revised language that stated that a 
non-party has the ``same'' rights as any party when responding to 
discovery requests.
     We have made corresponding changes throughout Sec.  
405.1821, with respect to discovery in intermediary hearing 
proceedings, where appropriate.

O. Subpoenas (Sec.  405.1857)

     We are adding language to proposed Sec.  405.1857(a)(1)(i) 
to clarify that the Board may not issue a subpoena to CMS or to the 
Secretary (or to any Federal agency).
     Section 405.1857(a)(2)(i)--We have revised the deadline by 
which a request for a subpoena for discovery must be received by the 
Board from 90 days before the date of the hearing to 120 days of the 
initially scheduled starting date of the hearing.
     Section 405.1857(a)(3)(i)--We have revised the deadline 
for issuing a subpoena from 75 days before the date of the hearing to 
90 days before the initially scheduled starting date of the Board 
hearing.
     Section 405.1857(a)(4)--We have eliminated the 
subparagraphs to Sec.  405.1857(a)(4) and have revised this paragraph 
to provide that the Board may extend the deadlines for requesting a 
Board subpoena and for the Board to issue a subpoena without a finding 
of ``good cause.'' We have also revised this paragraph to provide that, 
if the Board grants an extension to the deadline for requesting a Board 
subpoena or for the Board to issue a subpoena, the Board has the 
discretion to reschedule the hearing date without a finding that it was 
``necessary'' to do so.
     Section 405.1857(b)(3)--We have clarified this paragraph 
to state that the Board ``uses'' (rather than ``must comply'' with) the 
FRCP and the Federal Rules of Evidence for guidance.
     Section 405.1857(c)(3)--This section is redesignated from 
proposed Sec.  405.1857(c)(4) and the references to HHS and CMS are 
removed.
     Section 405.1857(d)(2)(v)--With respect to the situation 
where a party or non-party seeks immediate review of a Board subpoena, 
and the Administrator may, but chooses not to, grant or take own motion 
review of the subpoena, we have revised the language that stated ``the 
Board's action stands'' to ``the Board's action is not immediately 
reviewable.''

Q. Board Actions in Response To Failure To Follow Board Rules (Sec.  
405.1868)

     Section 405.1868(c)(1)--We have added this paragraph to 
provide that, if the intermediary fails to meet any filing or 
procedural deadlines or other Board requirements, the Board may issue a 
decision based on the written record submitted to that point or take 
other appropriate action.
     Section 405.1868(c)--We have added language at the end of 
this paragraph to clarify that the Board's authority, in the situation 
where an intermediary fails to meet a filing deadline or other 
requirement established by the Board, does not extend to, as a 
sanction, reversing or modifying the intermediary or Secretary 
determination or ruling against the intermediary on a disputed issue of 
law or fact.
     Miscellaneous--We have renumbered proposed Sec.  
405.1868(d)(3) as Sec.  405.1868(e) and made corresponding numbering 
changes. We have also added Sec.  405.1868(f) and Sec.  405.1868(g) as 
a result of adopting the first and second of our ``Three Additional 
Proposals Under Consideration'' (see section II.W. of this final rule).

R. Scope of Board's Authority in a Hearing Decision (Sec.  405.1869 and 
Sec.  405.1829)

     Section 405.1869(b)(2)(i), Sec.  405.1869(b)(2)(ii)--We 
have deleted these paragraphs as superfluous.

S. Board Hearing Decision and Intermediary Hearing Decision (Sec.  
405.1871, Sec.  405.1831 and Sec.  405.1833)

     Section 405.1871(a)(4) and Sec.  405.1831(c)--We are 
revising the proposed rule's reference to ``general CMS instructions'' 
to read ``other interpretive rules, general statements of policy, and 
rules of agency organization, procedure or practice established by 
CMS.''
     Section 405.1831(d)--We have made a technical change 
concerning the component within CMS where intermediary hearing officer 
decisions should be sent.

T. Administrator Review (Sec.  405.1875)

     Section 405.1875(b)(1) and Sec.  405.1875(b)(5)--We have 
made a technical change, replacing ``general CMS instructions'' with 
``other interpretive rules, general statements of policy, and rules of 
agency organization, procedure, or practice established by CMS.''
     Section 405.1875(e)(3)--We have clarified language to 
state that the Administrator's decision ``may'' (instead of ``must'') 
rely on certain authorities.
     Miscellaneous--We have made certain organizational changes 
to paragraphs Sec.  405.1875(c)(1) and Sec.  405.1875(c)(2), moving 
material from Sec.  405.1875(c)(2) to Sec.  405.1875(c)(1), and have 
made a number of minor wording changes.

U. Judicial Review (Sec.  405.1877)

     Minor technical changes were made to this section.

V. Reopening Procedures (Sec.  405.1885 Through Sec.  405.1889)

     Section 405.1885(a)--Clarifying language has been added to 
emphasize that only the entity that made the

[[Page 30240]]

original determination or decision may conduct the reopening of the 
determination or decision.
     Section 405.1885(b)(2)--We added clarifying language to 
state that if a request for reopening is made timely, the request 
remains timely notwithstanding that the notice of reopening required by 
Sec.  405.1887 is issued after the expiration of the 3-year period. We 
also clarified that the calculation of the date of receipt for a 
reopening request must be consistent with the definition of ``date of 
receipt'' in Sec.  405.1801(a).
     Section 405.1885(c)(3)--We added clarifying language to 
provide that a matter may be reopened while it is pending on appeal 
before the Administrator.

W. Three Additional Proposals Under Consideration

     Section 405.1868(f)--We have added this section to address 
ex parte communications with Board staff.
     Section 405.1868(g)--We have added this section to provide 
the Board with authority to address allegations that a party's 
representative has divulged confidential information obtained during 
the course of the representative's relationship with an opposing party.
     Section 405.1803(d)--We have revised this section to state 
that CMS may require the intermediary to audit any item at issue in an 
appeal or a civil action before any revised intermediary determination 
or additional payment, recoupment, or offset may be determined under 
paragraph Sec.  405.1803(d)(2) of that section.
     Section 405.1831(e) and Sec.  405.1871(b)(4)(added) Sec.  
405.1875(f)(5)(amended)--We have added Sec.  405.1831(e) and Sec.  
405.1871(b)(4), and have revised Sec.  405.1875(f)(5), to provide that, 
where the intermediary's denial of relief was based on procedural 
grounds or on the failure to supply adequate supporting documentation, 
and the reviewing entity rules that the basis of the intermediary's 
denial is invalid, the reviewing entity will remand to the intermediary 
to make a determination on the merits.

X. Technical Revisions

     Section 413.30(c)(2)--We have added language, that was 
consistent with our proposal, but which was inadvertently omitted from 
the proposed text, to state that the time required by the intermediary 
to review a request for a SNF exception is considered good cause for 
the SNF to request an intermediary hearing.

Y. Effective Date

     The rule is generally effective 90 days after publication 
in the Federal Register.
     For appeals pending before an intermediary hearing 
officer(s) or the Board prior to the effective date of this rule, a 
provider that wishes to add one or more issues to its appeal must do so 
by the expiration of the later of the following periods:
    ++ Sixty days after the expiration of the applicable 180-day period 
prescribed in Sec.  405.1811(a)(3) (for intermediary hearing officer 
hearings).
    ++ Section 405.1835(a)(3) (for Board hearings); or (ii) 60 days 
after the effective date of this rule. For appeals filed on or after 
the effective date of this rule, the provisions of Sec.  405.1811(c) 
and Sec.  405.1835(c) apply.
     With respect to requests for good cause extensions under 
Sec.  405.1813 (intermediary hearing officer hearings) and Sec.  
405.1836 (Board hearings), providers that have not filed a timely 
appeal as of the effective date of this rule and that wish to seek an 
extension of the time limit for filing an appeal based on good cause, 
have an additional 60 days after the effective date of this rule to 
seek an extension without meeting the ``reasonable time'' requirements 
of revised Sec.  405.1813 and Sec.  405.1836 (but must meet all other 
requirements of those sections).
     As noted above in section II.D.1. of this final rule, the 
requirement that a provider must self-disallow 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, is 
effective for cost reporting periods ending on or after December 31, 
2008.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act (PRA) of 1995, we are required to 
provide 30-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 (ICRs) associated with the hearing 
process. Because these collection requirements are collected in 
accordance with an administration action or audit or both, they are not 
subject to the PRA, as stipulated under 5 CFR 1320.4.

A. Information Collection Requirements (ICRs)--The Introduction Sec.  
405.1801

    Section 1801(b) states that 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). For 
the purposes of this subpart, the term ``provider'' includes a 
hospital, hospice program, critical access hospital, comprehensive 
outpatient rehabilitation facility, renal dialysis facility, Federally 
qualified health center, home health agency, rural health clinic, 
skilled nursing facility, and any other entity included under the Act. 
The burden associated with this requirement is the time and effort 
associated with a provider completing and submitting a cost report. 
While this requirement is subject to the PRA, it is currently approved 
under the following OMB control numbers.

------------------------------------------------------------------------
            Provider type              OMB Control No.   Expiration date
------------------------------------------------------------------------
Hospital............................         0938-0050        05/31/2008
Hospice Program.....................         0938-0758        01/31/2008
Critical Access Hospital............         0938-0050        05/31/2008
Comprehensive Outpatient                     0938-0037        01/31/2008
 Rehabilitation Facility............
Renal Dialysis Facility.............         0938-0236      **06/30/2007
Federally Qualified Health Center...         0938-0107        06/30/2008

[[Page 30241]]

 
Home Health Agency..................         0938-0022      **04/30/2007
Rural Health Clinic.................         0938-0107        06/30/2008
Skilled Nursing Facility............         0938-0463      **04/30/2007
------------------------------------------------------------------------
** We have initiated the OMB approval process to obtain reapproval of
  the currently approved information collection request.

B. ICRs Regarding the Right to Intermediary Hearing; Contents of, and 
Adding Issues to, Hearing Request Sec.  405.1811

    This section outlines the criteria a provider must meet to request 
an intermediary hearing. As stated in Sec.  405.1811(b), a provider's 
request for an intermediary hearing must be submitted in writing to the 
intermediary. The request must demonstrate that the provider meets all 
of the requirements for an intermediary hearing, explain the 
dissatisfaction for each item at issue, and contain a copy of the 
intermediary or Secretary's determination under appeal.
    In addition to the initial hearing request described in Sec.  
405.1811(b), Sec.  405.1811(c) explains the criteria providers must 
meet to add issues to a hearing request that has already been filed. 
The specific Medicare payment issues must be submitted in writing to 
the intermediary hearing officer. The request to add additional issues 
to a hearing request must be received no later than 60 days after the 
expiration date of the applicable 180-day time limit.
    The burden associated with the requirements listed in both Sec.  
405.1811(b) and Sec.  405.1811(c) is the time and effort associated 
with drafting and submitting the written requests to the intermediary 
hearing officer. While these requirements impose burden, we believe 
they are exempt from the PRA as defined in 5 CFR 1320.4. Information 
collected during the conduct of a criminal investigation or civil 
action or during the conduct of an administrative action, 
investigation, or audit involving an agency against specific 
individuals or entities is not subject to the PRA.

C. ICRs Regarding Good Cause Extension of the Time Limit for Requesting 
an Intermediary Hearing Sec.  405.1813

    As stated in Sec.  405.1813(a)(3), an intermediary must dismiss any 
hearing requests received after the 180-day time limit, except that the 
hearing officer may extend the deadline if the provider demonstrates 
good cause. A provider must explain, in writing, why it could not file 
the hearing request in a timely manner.
    The burden associated with this requirement is the time and effort 
associated with drafting and submitting the written request for a 
deadline extension. While this requirement imposes a burden, we believe 
it is exempt from the PRA as defined in 5 CFR 1320.4. Information 
collected during the conduct of a criminal investigation or civil 
action or during the conduct of an administrative action, 
investigation, or audit involving an agency against specific 
individuals or entities is not subject to the PRA.

D. ICRs Regarding CMS Reviewing Official Procedure Sec.  405.1834

    Section 405.1834(a) states that a provider, dissatisfied with a 
final decision by the intermediary hearing officer(s), may request 
further administrative review of the decision. Section 405.1834(c) 
explains the submission criteria for such a request. The Office of 
Hearings cannot receive the request later than 60-days after the 
provider receives the final decision of the intermediary hearing 
officer. The request must be in writing with an attached copy of the 
intermediary hearing officer decision in question, and any additional 
supporting information.
    The burden associated with this requirement is the time and effort 
associated with drafting the written request for further administrative 
review, gathering the necessary supporting information, and submitting 
the request to the Office of Hearings. While this requirement imposes 
burden, we believe it is exempt from the PRA as defined in 5 CFR 
1320.4. Information collected during the conduct of a criminal 
investigation or civil action or during the conduct of an 
administrative action, investigation, or audit involving an agency 
against specific individuals or entities is not subject to the PRA.

E. ICRs Right to Board Hearing; Contents of, and Adding Issues to, 
Hearing Request Sec.  405.1835

    Section 405.1835(a) discusses the criteria a provider must meet to 
request a Board hearing. Section 405.1835(b) states a provider's 
request for a Board hearing must be submitted in writing to the Board. 
In addition, Sec.  405.1835(b) outlines the required contents of the 
written submission to the Board. The request must demonstrate that the 
provider meets all of the requirements for a Board hearing, explain the 
provider's dissatisfaction for each item at issue, and contain a copy 
of the intermediary or Secretary's determination under appeal.
    Section 405.1835(c) explains the criteria providers must meet to 
add issues to a hearing request that has already been filed. The 
specific Medicare payment issues must be submitted in writing to the 
Board. The Board cannot receive the request to add additional issues to 
a hearing request later than 60-days after the expiration date of the 
applicable 180-day time limit.
    The burden associated with the information collection requirements 
listed in both Sec.  405.1835(b) and Sec.  405.1835(c) is the time and 
effort required to draft and submit the written requests to the Board. 
While these requirements impose burden, we believe they are exempt from 
the PRA as defined in 5 CFR 1320.4. Information collected during the 
conduct of a criminal investigation or civil action or during the 
conduct of an administrative action, investigation, or audit involving 
an agency against specific individuals or entities is not subject to 
the PRA.

F. ICRs Regarding Good Cause Extension of Time Limit for Requesting a 
Board Hearing Sec.  405.1836

    As stated in Sec.  405.1836(a), the Board must dismiss any hearing 
requests received after the 180-day time limit. However, the Board may 
extend the deadline if the provider demonstrates good cause. A provider 
must explain, in writing, why it could not file the hearing request in 
a timely manner.
    The burden associated with this requirement is the time and effort 
necessary to draft and submit a written explanation showing good cause. 
While this requirement imposes a burden, we believe it is exempt from 
the PRA as defined in 5 CFR 1320.4. Information collected during the 
conduct of a criminal investigation or civil action or during the 
conduct of an administrative action, investigation, or audit involving 
an agency against specific individuals or entities is not subject to 
the PRA.

[[Page 30242]]

G. ICRs Regarding Group Appeals Sec.  405.1837

    Providers have the right to a Board hearing as an individual or as 
a part of a group appeal with other providers. Sections 405.1837(a)(1 
through 3) list the eligibility criteria associated with submitting a 
Board hearing request as part of a group appeal. Section 405.1837(b) 
discusses the usage and filing of group appeals. Specifically, Sec.  
405.1837(b)(1) states that two or more providers under common ownership 
or control must bring a group appeal on an issue that is common to the 
providers and for which there is an aggregate amount in controversy of 
at least $50,000. Under Sec.  405.1837(b)(2), two or more providers not 
under common ownership or control may bring a group appeal on an issue 
involving at least $50,000. A written request for a Board hearing as a 
group must be submitted in accordance with the criteria listed in Sec.  
405.1837(c).
    Section 405.1837(e)(2) explains that the Board may make 
jurisdictional findings under Sec.  405.1840 at any time. This section 
also explains that providers may request jurisdictional findings by 
notifying the Board in writing. The written request must notify the 
Board 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.
    Section 405.1837(e)(4) states that a provider may submit a request 
to the Board to join a group appeal. The request must be granted by the 
Board unless it is opposed by any of the existing group members. In 
addition, the provider must make the request prior to Board issuance of 
one of the decisions specified in Sec.  405.1875(a)(2).
    While all of the aforementioned requirements in Sec.  405.1837 
impose burden, we believe they are exempt from the PRA as defined in 5 
CFR 1320.4. Information collected during the conduct of a criminal 
investigation or civil action or during the conduct of an 
administrative action, investigation, or audit involving an agency 
against specific individuals or entities is not subject to the PRA.

H. ICRs Regarding Amount in Controversy Sec.  405.1839

    Section 405.1839(a) discusses the amount in controversy 
requirements for single provider appeals. This requirement pertains to 
both intermediary hearings and Board hearings. The provider is required 
to demonstrate that if the 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 appeal.
    Similarly, Sec.  405.1839(b) explains that groups must satisfy the 
amount in controversy requirement as well. The group must demonstrate 
that in the event of a successful appeal, the total program 
reimbursement for the cost reporting periods under appeal increases by 
a minimum of $50,000.
    All of the information collection requirements listed in Sec.  
405.1839 are exempt from the PRA as defined in 5 CFR 1320.4. The 
information collection is part of an administrative action. Information 
collections conducted or sponsored during the conduct of a criminal or 
civil action, or during the conduct of an administrative action, 
investigation, or audit are not subject to the PRA.

I. ICRs Regarding Expedited Judicial Review Sec.  405.1842

    The burden associated with this section is detailed in Sec.  
405.1842(d). Providers have the right to request expedited judicial 
review of a legal question relevant to a specific matter at issue in a 
Board appeal. The Board must have jurisdiction to conduct a hearing on 
the matter and must determine that it lacks the authority to decide a 
legal question. Specifically, a provider must submit a request in 
writing to the Board and to each party to the appeal. The request must 
contain the information specified in Sec.  405.1842(d)(1) and Sec.  
405.1842(d)(2).
    The burden associated with this requirement is the time and effort 
necessary for a provider to draft and submit the written request to the 
Board and to each party to the appeal. While this requirement imposes a 
burden, we believe it is exempt from the PRA as defined in 5 CFR 
1320.4. Information collected during the conduct of a criminal 
investigation or civil action or during the conduct of an 
administrative action, investigation, or audit involving an agency 
against specific individuals or entities is not subject to the PRA.

V. Regulatory Impact Statement

    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, Public Law 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 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 final rule is the 
information collection burden associated with filing a request for an 
intermediary or Board hearing. This proposed rule does not impose any 
new paperwork burdens on providers. It will merely require providers to 
prepare their hearing requests in a more expedited fashion. Moreover, 
this final rule will 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 604 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 Board hearing. This final 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.

[[Page 30243]]

Moreover, this final rule will 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, Medical devices, Medicare, Reporting and 
recordkeeping requirements, Rural areas, X-rays.

42 CFR Part 413

    Health facilities, Kidney diseases, Medicare, 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.


0
For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR Chapter IV as set forth below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

Subpart R--Provider Reimbursement Determinations and Appeals

0
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).


0
2. Section 405.1801 is amended by--
0
A. In paragraph (a), removing `` 's '' from Administrator's in the term 
``Administrator's review''.
0
B. In paragraph (a), removing the definition of ``date of filing'' and 
``date of submission of materials.''
0
C. In paragraph (a), adding a definition for ``CMS reviewing 
official.''
0
D. In paragraph (a), revising the definition for ``Date of receipt.''
0
E. In paragraph (a), adding the definitions of ``CMS reviewing official 
procedure'', ``Intermediary hearing officer(s)'', and ``Reviewing 
entity'' in alphabetical order.
0
E. Revising paragraph (b).
0
F. Adding a new paragraph (d).
    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 either of the following:
    (1) A party or an affected nonparty. A party or an affected 
nonparty, such as CMS, involved in proceedings before a reviewing 
entity.
    (i) As applied to a party or an affected nonparty, 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.
    (ii) For purposes of an intermediary hearing, if no intermediary 
hearing officer is appointed (or none is currently presiding), the date 
of receipt of materials sent to the intermediary hearing officer is 
presumed to be the date that the intermediary stamps ``Received'' on 
the materials.
    (iii) The date of receipt by a party or affected nonparty of 
documents 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. This presumption, which is otherwise 
conclusive, may be overcome if it is established by a preponderance of 
the evidence that such materials were actually received on a later 
date.
    (2) A reviewing entity. For purposes of this definition, a 
reviewing entity is deemed to include the Office of the Attorney 
Advisor. The determination as to the date of receipt by the reviewing 
entity to which the document or other material was submitted is final 
and binding as to all parties to the appeal. The date of receipt of 
documents by a reviewing entity is presumed to be the date--
    (i) Of delivery where the document or material is transmitted by a 
nationally-recognized next-day courier (such as the United States 
Postal Service's Express Mail, Federal Express, UPS, DHL, etc.); or
    (ii) Stamped ``Received'' by the reviewing entity on the document 
or other submitted material (where a nationally-recognized next-day 
courier is not employed). This presumption, which is otherwise 
conclusive, may be overcome if it is established by clear and 
convincing 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 (as described in part 482 of this chapter), hospice 
program (as described in 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 nonprovider entities participating in Medicare Part A. 
(i) Providers of services, as well as, other entities (including, but 
not limited to health maintenance organizations (HMOs) and competitive 
medical plans (CMPs) (as described in Sec.  400.200 of this chapter)) 
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

[[Page 30244]]

Board hearing under section 1878 of the Act or this subpart.
    (iii) Some other hearing will be available to these nonprovider 
entities, if the amount in controversy is at least $1,000.
    (iv) For any nonprovider 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 the following principles are 
applicable:
    (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, including the last 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) If the last day of the designated time period is a Saturday, a 
Sunday, a Federal legal holiday (as enumerated in Rule 6(a) of the 
Federal Rules of Civil Procedure), or a day on which the reviewing 
entity is unable to conduct business in the usual manner, the deadline 
becomes the next day that is not one of the aforementioned days.
    (4) For purposes of paragraph (d) of this section, the reviewing 
entity is deemed to also include--
    (i) The intermediary, if the intermediary hearing officer(s) is not 
yet appointed (or none is currently presiding); and
    (ii) The Office of the Attorney Advisor.

0
3. Section 405.1803 is amended by:
0
A. In the first sentence of paragraph (a) introductory text, remove the 
citation ``(see Sec.  405.1835(b))'' and add ``(as described in Sec.  
405.1835(a)(3)(ii))'' in its place.
0
B. In the second sentence of paragraph (b), remove the phrase ``after 
the date of the notice.'' and add ``after the date of receipt of the 
notice.'' in its place.
0
C. Adding new paragraph (d).
    The addition reads 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 and other items.
    (1) This paragraph applies to the following administrative 
decisions and court judgments:
    (i) A final hearing decision by the intermediary (as described in 
Sec.  405.1833 of this subpart) or the Board (as described in Sec.  
405.1871(b) of this subpart).
    (ii) A final decision by a CMS reviewing official (as described in 
Sec.  405.1834(f)(1) of this subpart) or the Administrator (as 
described in Sec.  405.1875(e)(4) of this subpart) 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 with 
jurisdiction under section 1878 of the Act (as described in Sec.  
405.1842 and Sec.  405.1877 of this subpart).
    (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; and
    (ii) Issue any revised intermediary determination, and make any 
additional program payment, or recoup or offset any program payment (as 
described in Sec.  405.371 of this subpart), 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 item, including 
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.

0
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 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) Effective with cost reporting periods that end on or after 
December 31, 2008, 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 of this subpart) 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 of this subpart, 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) When 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

[[Page 30245]]

request for an intermediary hearing must be submitted in writing to the 
intermediary, and the request must include the elements described in 
paragraphs (b)(1) through (b)(3) of this section. If the provider 
submits a hearing request that does not meet the requirements of 
(b)(1), (b)(2), or (b)(3) of this section, the intermediary hearing 
officer may dismiss with prejudice the appeal, or take any other 
remedial action he or she considers appropriate.
    (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 (as described 
in paragraph (a)(1) of this section), 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 (or, where applicable, why the provider is unable to 
determine whether Medicare payment is correct because it allegedly does 
not have access to underlying information concerning the calculation of 
its payment); and
    (ii) How and why the provider believes Medicare payment should 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 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 the following requirements are met:
    (1) The 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.

0
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) of this subpart must be dismissed by the 
intermediary hearing officer(s), except that 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) of this 
subpart.
    (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) of this subpart or reopened and 
revised by the intermediary hearing officer(s) in accordance with Sec.  
405.1885 through Sec.  405.1889 of this subpart. The intermediary 
hearing officer(s) promptly mails the decision to the appropriate 
component of CMS (currently the Center for Medicare Management) (as 
specified in Sec.  405.1834(b)(4) of this subpart).
    (2) A decision granting an extension request under this section is 
not subject to immediate review by a CMS reviewing official (as 
described in Sec.  405.1834(b)(3) of this subpart). 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) (as described in Sec.  405.1834(b)(2)(i) and Sec.  
405.1834(b)(2)(ii) of this subpart).

0
6. A new Sec.  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 of this subpart, the intermediary hearing 
officer(s) must do the following:
    (i) 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.
    (ii) Make a preliminary determination of the scope of its 
jurisdiction (that is, whether the request for hearing was timely, and 
whether the amount in controversy requirement has been met), if any, 
over the matters at issue in the appeal before conducting any of the 
following proceedings:
    (A) Determining its authority to decide a legal question relevant 
to a matter at issue (as described in Sec.  405.1829 of this subpart);
    (B) Permitting discovery (as specified in Sec.  405.1821 of this 
subpart); or
    (C) Conducting a hearing (as specified in Sec.  405.1819 of this 
subpart);
    (2) The hearing officer(s) may revise a preliminary jurisdictional 
determination at any subsequent stage of the proceedings in an appeal, 
and it must promptly notify the parties of any revised determination.
    (3) Under paragraph (c)(1) of this section, each intermediary 
hearing decision (as described in Sec.  405.1831 of this subpart) must 
include a final jurisdictional finding for each specific matter at 
issue in the appeal.
    (4) If the hearing officer(s) finally determines it lacks 
jurisdiction over every specific matter at issue in the appeal, it 
issues a jurisdictional

[[Page 30246]]

dismissal decision under paragraph (c)(2) of this section.
    (5) 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) of this subpart.
    (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 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 and services are excluded from coverage under section 1862 of the 
Act and part 411 of the regulations. Review of these findings is 
limited to the applicable provisions of sections 1155, 1869, and 
1879(d) of the Act, and of subpart I of part 405 and subpart B of part 
478, as applicable.
    (2) Certain matters affecting payments to hospitals under the 
prospective payment system, as provided in section 1886(d)(7) of the 
Act and Sec.  405.1804 of this subpart.
    (3) Any self-disallowed item except as permitted in Sec.  
405.1811(a)(1)(ii) of this subpart.
    (c) Final jurisdictional findings, and jurisdictional dismissal 
decisions by intermediary hearing officer(s). (1) In issuing a hearing 
decision under Sec.  405.1831 of this subpart, 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. 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.
    (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 of this subpart or reopened 
and revised by the intermediary hearing officer(s) in accordance with 
Sec.  405.1885 through Sec.  405.1889 of this subpart.
    (d) CMS reviewing official review. Any finding by the intermediary 
hearing officer 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 review, except as provided in this paragraph. The 
intermediary hearing officer's jurisdictional findings as to specific 
matters at issue in an appeal may be reviewed solely during the course 
of CMS reviewing official review of one of the intermediary hearing 
officer decisions specified in Sec.  405.1834(b)(2) of this subpart.

0
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 of this subpart, the parties to all 
proceedings before the intermediary hearing officer(s) are the provider 
and, if applicable, any other entity found by the intermediary hearing 
officer(s) to be a related organization of the provider under the 
principles enunciated in 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).

0
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) of this subpart.
    (2) A prehearing discovery request is timely if the request by a 
party is served no later than 120 days before the initially scheduled 
starting date of the intermediary hearing, unless the intermediary 
hearing officer(s) extend the time for requesting discovery.
    (3) In the absence of a specific schedule for responses set by the 
intermediary hearing officer(s), responses to interrogatories and 
requests for production of documents are due according to the schedule 
agreed upon by the party serving discovery and the party to which the 
discovery is directed. Responses by a party to interrogatories or 
requests for production of documents must be served no later than 45 
days before the initially scheduled start of the intermediary hearing, 
unless the intermediary hearing officer(s) orders otherwise. Responses 
by a nonparty to requests for production of documents must be served no 
later than 75 days after the date the requests were served on the 
nonparty, unless the party requesting the documents and the nonparty to 
which the requests are directed agree on a different time for 
responding, or unless the intermediary hearing officer(s) extends the 
time for responding.
    (4) Before ruling on a request to extend the time for requesting 
discovery or for responding to discovery, the hearing officer(s) must 
give the other parties to the appeal and any nonparty subject to a 
discovery request a reasonable period to respond to the extension 
request.
    (5) If the extension request is granted, the hearing officer(s) 
sets a new deadline and has the discretion to reschedule the hearing 
date.
    (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 of a nonparty other 
than CMS, the Secretary or any Federal agency, the reasonable 
production of documents for inspection and copying.

[[Page 30247]]

    (ii) A party may request another party to respond to a reasonable 
number of written interrogatories.
    (iii) 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 nonparties: 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 nonparty other than CMS, HHS or other Federal agency. Any 
discovery request filed with the intermediary hearing officer(s) must 
be mailed promptly to the party or nonparty from which the discovery is 
requested, and to any other party to the intermediary hearing (as 
described in Sec.  405.1815 of this subpart).
    (2) If a discovery request is made of a nonparty to the 
intermediary hearing, the nonparty has the rights any party has in 
responding to a discovery request. The rights of the nonparty 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 and nonparty 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 nonparty.
    (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 nonparty.
    (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. A self-sworn declaration describing 
efforts to resolve or narrow a discovery dispute 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 nonparty 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) finds necessary and appropriate. 
Nothing in this section authorizes the intermediary hearing officer to 
compel any action from the Secretary or CMS.
    (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 (as described in 
Sec.  405.1834(b)(3) of this subpart). A discovery ruling may be 
examined solely during the course of CMS review under Sec.  405.1834 of 
this subpart of a jurisdictional dismissal decision (as described in 
Sec.  405.1814(c)(2) of this subpart) or a hearing decision (as 
described in Sec.  405.1831 of this subpart) 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 such as case preparation, 
confidentiality, or undue burden, 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).
    (i) Upon notice to the intermediary hearing officer that the 
provider intends to seek immediate review of a ruling, or that the 
intermediary or other affected nonparty intends to suggest that the 
Administrator through the CMS reviewing official, take own motion 
review of the ruling, the intermediary hearing officer stays all 
proceedings affected by the ruling.
    (ii) The intermediary hearing officer must determine, under the 
circumstances of a given case, the length of any stay, but in no event 
may the stay be less than 15 days.
    (iii) If the Administrator through the CMS reviewing official--
    (A) Grants a request for review, or takes own motion review, of a 
ruling, the ruling is stayed until such time as the CMS reviewing 
official issues a written decision that affirms, reverses, modifies, or 
remands the intermediary hearing officer's ruling.
    (B) Does not grant review or take own motion review within the time 
allotted for the stay, the stay is lifted and the ruling is not subject 
to immediate review.
    (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.

0
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 nonparty (as described in Sec.  405.1821(c) of 
this subpart), 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.
    (d) A copy of the transcription must be made available to any party 
upon request.

0
10. Section 405.1829 is amended by--
0
A. Revising the section heading.
0
B. In paragraph (a), the parenthetical phrase ``(see 42 CFR 401.108)'' 
is removed and add ``(as described in Sec.  401.108 of this chapter)'' 
in its place.
0
C. Revising paragraph (b).
    The revisions are 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 (as described in Sec.  405.1831 of this subpart), 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 (as 
described in Sec.  405.1814(b) of this subpart) or which was not timely 
raised in the provider's hearing request.
    (3) The authority of the intermediary hearing officer(s) under this 
paragraph to make the additional revisions is limited to those 
revisions necessary to fully resolve a specific matter at issue if--

[[Page 30248]]

    (i) The hearing officer(s) has jurisdiction to grant a hearing on 
the specific matter under Sec.  405.1811 and Sec.  405.1814 of this 
subpart; and
    (ii) The specific matter was timely raised in an initial request 
for an intermediary hearing filed in accordance with Sec.  405.1811(b) 
of this subpart or in a timely request to add issues to an appeal 
submitted in accordance with Sec.  405.1811(c) of this subpart.

0
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 (as 
described in Sec.  405.1814(a) of this subpart) and conducts a hearing 
the intermediary 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 (as described in Sec.  405.1823 of this 
subpart) and other evidence as may be included in the record (as 
described in Sec.  405.1827 of this subpart).
    (c) The decision must include findings of fact and conclusions of 
law on jurisdictional issues (as described in Sec.  405.1814(c)(1) of 
this subpart) 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 other interpretive rules, 
general statements of policy, and rules of agency organization, 
procedure, or practice established by CMS.
    (d) A copy of the decision must be mailed promptly to the 
intermediary, to each party and to the appropriate component of CMS 
(which currently is the Center for Medicare Management).
    (e) When the intermediary's denial of the relief that the provider 
seeks before the intermediary hearing officer(s) was based on 
procedural grounds (for example, the alleged failure of the provider to 
satisfy a time limit), or was based on the alleged failure to supply 
adequate documentation to support the provider's claim, and the 
intermediary hearing officer(s) rule(s) that the basis of the 
intermediary's denial is invalid, the intermediary hearing officer(s) 
remands to the intermediary for the intermediary to make a 
determination on the merits of the provider's claim.

0
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 of this subpart 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 of this subpart or reopened and revised by the intermediary 
hearing officer(s) in accordance with Sec.  405.1885 through Sec.  
405.1889 of this subpart. Final intermediary hearing decisions are 
subject to the provisions of Sec.  405.1803(d) of this subpart.

0
13. A new Sec.  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), upon submitting 
a request that meets the requirements of paragraph (c) of this section, 
is entitled to further administrative review of the 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 controlling 
legal authority (as described in Sec.  405.1834(e)(1) of this subpart) 
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.
    (i) Nonfinal decisions and other nonfinal actions by the 
intermediary hearing officer(s) are not immediately reviewable, except 
as provided in paragraph (b)(3) of this section.
    (ii) The CMS reviewing official exercises this review authority in 
response to a request from a provider party to the appeal that meets 
the requirements of paragraph (c) of this section or may exercise his 
or her discretion to take own motion review.
    (2) A CMS reviewing official may immediately review the following:
    (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 (as described in Sec.  405.1813(e)(1) and Sec.  405.1814(c)(3) 
of this subpart).
    (ii) Any final intermediary hearing decision (as described in Sec.  
405.1831 of this subpart).
    (3) Nonfinal decisions and other nonfinal 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 (as 
described in Sec.  405.1813(e)(2), Sec.  405.1814(c) and (d), and Sec.  
405.1821(d)(1) of this subpart), except that the CMS reviewing official 
may immediately review a ruling, authorizing discovery or disclosure of 
a matter, where there is a claim of privilege or other protection from 
disclosure such as case preparation, confidentiality, or undue burden.
    (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 (b)(2) of this 
section or Sec.  405.1821(d)(2) of this subpart to the appropriate 
component of CMS (currently the Center for Medicare Management).
    (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 the appropriate component 
of CMS.
    (ii) The appropriate CMS component examines each intermediary 
hearing officer decision that is reviewable under paragraph (b)(2) of 
this section or Sec.  405.1821(d)(2) of this subpart, 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 appropriate CMS component of the 
review request is no later than 60 days after the date of receipt by 
the provider of the intermediary hearing officer decision; or
    (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 all of the following:
    (i) Those aspects of the intermediary hearing officer decision with 
which the provider is dissatisfied.

[[Page 30249]]

    (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 such evidence was improperly 
excluded from the intermediary hearing (as described in Sec.  405.1823 
of this subpart).
    (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; and
    (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 take 
own motion review 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 exercise this authority, the CMS reviewing official 
must, no later than 60 days after the date of the intermediary hearing 
officer's decision, notify the parties and the intermediary that he or 
she intends to review the intermediary hearing officer decision or 
other reviewable action.
    (3) In the notice, the CMS reviewing official identifies with 
particularity the issues that are to be reviewed, and gives each party 
(as described in Sec.  405.1815 of this subpart) and affected nonparty 
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 
(as described in Sec.  401.108 of this chapter), and afford great 
weight to other interpretive rules, general statements of policy, and 
rules of agency organization, procedure, or practice established by 
CMS;
    (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) (as described in Sec.  405.1827 of this subpart) 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 (as described in Sec.  405.1823 of this subpart).
    (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) It is not necessary or appropriate to remand the matter to 
the intermediary hearing officer(s).
    (3) Upon completion of the review of an intermediary hearing 
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 decision. A copy of the 
decision must be mailed promptly to each party, to the intermediary, 
and to the appropriate component of CMS (currently the Center for 
Medicare Management).
    (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 and 
revised by a CMS reviewing official in accordance with Sec.  405.1885 
through Sec.  405.1889 of this subpart. Decisions of a CMS reviewing 
official are subject to the provisions of Sec.  405.1803(d) of this 
subpart. 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) of this subpart, 
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 of this 
subpart.

0
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, 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) Effective with cost reporting periods that end on or after 
December 31, 2008, self-disallowing the specific 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 of this subpart) is $10,000 or more; and
    (3) Unless the provider qualifies for a good cause extension under 
Sec.  405.1836 of this subpart, 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

[[Page 30250]]

Board hearing must be submitted in writing to the Board, and the 
request must include the elements described in paragraphs (b)(1) 
through (b)(4) of this section. If the provider submits a hearing 
request that does not meet the requirements of paragraphs (b)(1), 
(b)(2), or (b)(3) of this section, the Board may dismiss with prejudice 
the appeal, or take any other remedial action it considers appropriate.
    (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's or 
Secretary's determination under appeal.
    (2) An explanation (for each specific item at issue, see paragraph 
(a)(1) of this section) of the provider's dissatisfaction with the 
intermediary's or Secretary's determination under appeal, including an 
account of all of the following:
    (i) Why the provider believes Medicare payment is incorrect for 
each disputed item (or, where applicable, why the provider is unable to 
determine whether Medicare payment is correct because it does not have 
access to underlying information concerning the calculation of its 
payment).
    (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 (b)(2) of this section.
    (4) With respect to a provider under common ownership or control, 
the name and address of its parent corporation, and a statement that--
    (i) To the best of the provider's knowledge, no other provider to 
which it is related by common ownership or control, has pending a 
request for a Board hearing pursuant to this section or pursuant to 
Sec.  405.1837(b)(1) on any of the same issues contained in the 
provider's hearing request for a cost reporting period that falls 
within the same calendar year as the calendar year covered by the 
provider's hearing request; or
    (ii) Such a pending appeal(s) exist(s), the provider name(s), 
provider number(s), and the case number(s) (if assigned), for such 
appeal(s).
    (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 
the following requirements are met:
    (1) The 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 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.

0
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) of 
this subpart must be dismissed by the Board, except that 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 a 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 (as described in Sec.  405.1840(c) of 
this subpart). A copy of the Board's dismissal decision must be mailed 
promptly to each party to the appeal (as described in Sec.  405.1843 of 
this subpart).
    (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) and Sec.  405.1875(e) or Sec.  405.1875(f) of 
this subpart, no later than 60 days after the date of receipt by the 
provider of the Board's decision.
    (i) 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.
    (ii) A Board decision under paragraph (e)(1) of this section that 
is otherwise final and binding may be reopened and revised by the Board 
in accordance with Sec.  405.1885 through Sec.  405.1889 of this 
subpart.
    (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) of this subpart.
    (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.

0
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--

[[Page 30251]]

    (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) of this subpart;
    (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 of this subpart.
    (b) Usage and filing of group appeals. (1) Mandatory use of group 
appeals.
    (i) Two or more providers under common ownership or control that 
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 that arises in cost reporting 
periods that end in the same calendar year, and for which the amount in 
controversy is $50,000 or more in the aggregate, must bring the appeal 
as a group appeal.
    (ii) One or more of the providers under common ownership or control 
may appeal more than one cost reporting period with respect to the 
issue that is the subject of the group appeal for purposes of meeting 
the $50,000 amount in controversy requirement, and, subject to the 
Board's discretion, may appeal more than one cost reporting period with 
respect to the issue that is the subject of the group appeal for other 
purposes, such as convenience.
    (iii) A group appeal involving two or more providers under common 
ownership or control must consist entirely of providers under common 
(to all) ownership or control.

    (iv)(A) Example 1: A, B, C and D are commonly owned providers 
that wish to appeal issue X. This issue was adjusted on A, B and C's 
CY 2004 cost reports, and on D's CY 2005 cost report. The amount in 
controversy is more than $50,000 in the aggregate for providers A, B 
and C, and more than $10,000 for provider D. Providers A, B and C 
must appeal issue X as a group appeal. Provider D may pursue an 
individual appeal to the Board under the procedures set forth in 
Sec.  405.1835 of this subpart, or if the Board agrees, Provider D 
may join the group appeal. (If Provider D joins the group appeal, 
the calendar years in the group appeal would then be 2004 and 2005, 
and any provider related to Providers A through D by common 
ownership or control would be required to appeal issue X for its 
cost reporting period ending in 2004 or 2005 through the group 
appeal.)
    (B) Example 2: A, B and C are commonly owned providers that wish 
to appeal issue X. This issue was adjusted on A, B and C's CY 2004 
cost reports. The amount in controversy is less than $50,000 in the 
aggregate for providers A, B and C ($10,000 for A, $10,000 for B and 
$7,000 for C). Providers A, B and C cannot appeal issue X as a group 
appeal. Provider A, if it wishes, and provider B, if it wishes, may 
pursue an individual appeal to the Board under the procedures set 
forth in Sec.  405.1835 of this subpart. Provider C may not pursue 
an individual appeal to the Board, because the amount in controversy 
is less than $10,000; however, it may pursue an appeal to the 
intermediary under the procedures set forth in Sec.  405.1811 of 
this subpart.
    (2) Optional group appeals. (i) 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 of this 
subpart.
    (ii) One or more of the providers bringing a group appeal under 
this paragraph may appeal more than one cost reporting period with 
respect to the issue that is the subject of the group appeal for 
purposes of meeting the $50,000 amount in controversy requirement, and, 
subject to the Board's discretion, may appeal more than one cost 
reporting period with respect to the issue that is the subject of the 
group appeal for other purposes, such as convenience.
    (3) Initiating a group appeal. With respect to group appeals 
brought under paragraph (b)(1) of this section, one or more commonly 
owned or operated providers must make 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. With respect to group appeals brought under 
paragraph (b)(2) of this section, two or more providers may submit--
    (i) 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 of this subpart, be 
transferred from the single appeal to a group appeal.
    (c) Contents of request for a group appeal. The request for a Board 
hearing as a group appeal must be submitted in writing to the Board, 
and the request must include all of the following:
    (1) A demonstration that the request satisfies the requirements for 
a Board hearing as a group appeal, as specified in paragraph (a) of 
this section.
    (2) An explanation (for each specific item 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 item;
    (ii) How and why the provider believes Medicare payment must be 
determined differently for each disputed item; and
    (iii) If the provider self-disallows a specific item, a description 
of the nature and amount of each self-disallowed item and the 
reimbursement sought for each item.
    (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 that--
    (i) The providers believe they have satisfied all of the 
requirements for a group appeal hearing request under paragraph (a) of 
this section and requesting the Board to proceed to make jurisdictional 
findings in accordance with Sec.  405.1840; or
    (ii) The Board is requested to 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 of this subpart to a 
group appeal filed under 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

[[Page 30252]]

(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. The Board will determine that a group appeal 
brought under paragraph (b)(1) of this section is fully formed upon a 
notice in writing from the group that it is fully formed. Absent such a 
notice from the group, the Board may issue an order, requiring the 
group to demonstrate (within a period of not less than 15 days) that at 
least one commonly owned or controlled provider has preserved the issue 
for appeal by claiming the relevant item on its cost report or by self-
disallowing the item, but has not yet received its final determination 
with respect to the item for a cost year that is within the same 
calendar year as that covered by the group appeal (or that it has 
received its final determination with respect to the item for that 
period, and is still within the time to request a hearing on the 
issue). The Board determines that a group appeal brought under 
paragraph (b)(2) of this section is fully formed upon a notice in 
writing from the group that it is fully formed, or following an order 
from the Board that in its judgment, that the group is fully formed, or 
through general instructions that set forth a schedule for the closing 
of group appeals brought under paragraph (b)(2) of this section. When 
the Board has determined that a group appeal brought under paragraph 
(b)(1) of this section is fully formed, absent an order from the Board 
modifying its determination, no other provider under common ownership 
or control may appeal to the Board the issue that is the subject of the 
group appeal with respect to a cost reporting period that falls within 
the calendar year(s) covered by the group appeal.
    (2) The Board may make jurisdictional findings under Sec.  405.1840 
at any time, including, but not limited to, following a request by the 
providers for the jurisdictional findings. The providers may request 
jurisdictional 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 may 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. The Board does not dismiss a group appeal hearing request for 
failure to meet the $50,000 amount in controversy requirement until the 
Board has determined, in accordance with paragraph (e)(1) of this 
section, that the group is fully formed.
    (3) If the Board makes a preliminary determination of 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 (as described in Sec.  405.1840(a) of this subpart). 
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. The Board must make separate 
jurisdictional findings for each cost reporting period added 
subsequently to the group appeal (as described in Sec.  405.1837(a) and 
Sec.  405.1839(b) of this subpart).
    (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. 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 of this subpart, Sec.  
405.1835 of this subpart, or this section. For purposes of determining 
timeliness for the filing of any separate appeal and for the adding of 
issues to such appeal, the date of receipt of the provider's request to 
form or join the group appeal is considered the date of receipt for 
purposes of meeting the applicable 180-day period prescribed in Sec.  
405.1835(a)(3) of this subpart.
    (5)(i) Except as specified in paragraph (ii) of this paragraph, 
when a provider has appealed an issue through electing to form, or 
joining, a group appeal under the procedures set forth in this section, 
it may not subsequently request that the Board transfer that issue to a 
single provider appeal brought in accordance with Sec.  405.1811 or 
Sec.  405.1835 of this subpart.
    (ii) Exception. When the Board determines that the requirements for 
a group appeal are not met (that is, when there has been a failure to 
meet the amount in controversy or the common issue requirement), it 
transfers the issue that was the subject of the group appeal to a 
single provider appeal (or appeals) for the provider (or providers) 
that meets (or meet) the requirements for a single provider appeal.
    (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 (as described in Sec.  405.1837(a)(2) and (g) of this 
subpart).
    (2) The Board may not consider, in one group appeal, more than one 
question of fact, 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 
of this subpart--
    (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; and
    (ii) When the appeal is found to involve more than one factual or 
legal question common to each provider, the Board must 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 of this subpart, or 
file a separate request for a hearing as part of a different group 
appeal under this section, as applicable.

0
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) of this subpart for 
an intermediary hearing or the amount in controversy requirement under 
Sec.  405.1835(a)(2) of this subpart 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

[[Page 30253]]

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) of this subpart 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. (i) For purposes of satisfying the 
amount in controversy requirement, group members are not allowed to 
aggregate claims involving different issues.
    (A) A group appeal must involve a single question of fact or 
interpretation of law, regulations, or CMS Ruling that is common to 
each provider (as described in Sec.  405.1837(a)(2) of this subpart).
    (B) The single issue that is common to each provider may exist over 
different cost reporting periods.
    (ii) 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.
    (4) When a provider (or group of providers) has requested a hearing 
before an intermediary under Sec.  405.1811 of this subpart, and the 
amount in controversy is subsequently determined to be at least $10,000 
(for example, due to a reassessment of the amount in controversy by the 
intermediary hearing office or due to adding an issue), the appeal is 
transferred to the Board. The Board is not bound by any jurisdictional 
finding of the intermediary hearing officer(s).
    (5) When a provider or group of providers has requested a hearing 
before the Board under Sec.  405.1835 or Sec.  405.1837 of this 
subpart, and the amount in controversy changes to an amount less than 
the minimum for a Board appeal due to--
    (A) The settlement or partial settlement of an issue, transfer of 
an issue to a group appeal, or the abandonment of an issue in an 
individual appeal, the change in the amount in controversy does not 
deprive the Board of jurisdiction.
    (B) A more accurate assessment of the amount in controversy, the 
Board does not retain jurisdiction.

0
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 (that is, whether the request for hearing was timely, 
and whether the amount in controversy requirement has been met), if 
any, over the matters at issue in the appeal before conducting any of 
the following proceedings:
    (i) Determining its authority to decide a legal question relevant 
to a matter at issue (as described in Sec.  405.1842 of this subpart).
    (ii) Permitting discovery (as described in Sec.  405.1853 of this 
subpart).
    (iii) Issuing a subpoena (as described in Sec.  405.1857 of this 
subpart).
    (iv) Conducting a hearing (as described in Sec.  405.1845 of this 
subpart).
    (3) The Board may revise a preliminary determination of 
jurisdiction at any subsequent stage of the proceedings in a Board 
appeal, and must promptly notify the parties of any revised 
determination. Under paragraph (c)(1) of this section, each expedited 
judicial review (EJR) decision (as described in Sec.  405.1842 of this 
subpart) and hearing decision (as described in Sec.  405.1871 of this 
subpart) by the Board must include a jurisdictional finding for each 
specific matter at issue in the appeal.
    (4) If the Board finally 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) Final 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. Except with respect to the amount in controversy 
requirement, the jurisdiction of the Board 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 subpart or as part of a group appeal under Sec.  405.1837 of this 
subpart, as applicable. Certain matters at issue are removed from 
jurisdiction of the Board. 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 Part 411 of the regulations. Review of these findings is 
limited to the applicable provisions of sections 1155, 1869, and 
1879(d) of the Act and of Subpart I of Part 405 and Subpart B of Part 
478 of the regulations, as applicable.
    (2) Certain matters affecting payments to hospitals under the 
prospective payment system, as provided in section 1886(d)(7) of the 
Act and Sec.  405.1804 of this subpart.
    (3) Any self-disallowed cost, except as permitted in Sec.  
405.1835(a)(1)(ii) and Sec.  405.1837(a)(1) of this subpart.
    (c) Board's jurisdictional findings and jurisdictional dismissal 
decisions. (1) In issuing an EJR decision under Sec.  405.1842 of this 
subpart or a hearing decision under Sec.  405.1871 of this subpart, 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.

[[Page 30254]]

    (2) Except as provided in Sec.  405.1836(e)(1) and Sec.  
405.1842(f)(2)(i) of this subpart, 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 must be 
mailed promptly to each party to the appeal (as described in Sec.  
405.1843 of this subpart).
    (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) and Sec.  405.1875(e) or Sec.  405.1875(f) of 
this subpart, 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 and revised by the Board in accordance with Sec.  405.1885 
through Sec.  405.1889 of this subpart.
    (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 subpart, or during 
the course of judicial review of a final agency decision as described 
in Sec.  405.1877(a) of this subpart, as applicable.


Sec.  405.1841  [Removed]

0
19. Section 405.1841 is removed.

0
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 
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 (as described in Sec.  405.1840 of this subpart), and the Board 
determines it lacks the authority to decide the legal question (as 
described in Sec.  405.1867 of this subpart, explains the scope of the 
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 if--
    (i) 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) 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) General. (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 (as described in 
Sec.  405.1843 of this subpart). 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; and
    (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, a 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 (as described 
in Sec.  405.1843 of this subpart), 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 subpart 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

[[Page 30255]]

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 the following:
    (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 (as described in Sec.  405.1843 of this subpart). 
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 no 
later than 30 days after receipt of the incomplete request 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) of this section, 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 has jurisdiction to conduct a hearing on the specific 
matter at issue in accordance with Sec.  405.1840 of this subpart.
    (ii) The Board lacks the authority to decide a specific legal 
question relevant to the specific matter at issue because the legal 
question is a challenge either to the constitutionality of a provision 
of a statute, or to the substantive or procedural validity of a 
regulation or CMS Ruling.
    (2) The Board's decision 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 of this subpart.
    (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 neither a challenge to the constitutionality of a 
provision of a statute, nor a challenge to the substantive 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)(1)(i) or (f)(1)(ii) of 
this section are met.
    (3) A copy of the Board's decision must be sent promptly to--
    (i) Each party to the Board appeal (as described in Sec.  405.1843 
of this subpart) and
    (ii) 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 subpart, 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) and Sec.  
405.1875(e) or Sec.  405.1875(f) of this subpart 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 
(when 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 a final Board 
decision (as described in Sec.  405.1875(a)(2) and (e) of this subpart) 
may be reopened and revised in accordance with Sec.  405.1885 through 
Sec.  405.1889 of this subpart.
    (2) Board grants EJR. If the Board grants EJR, the provider may 
file a complaint in a Federal district court in order to obtain EJR of 
the legal question. If the Administrator renders, 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, the Board's decision is rendered nonfinal and 
the provider has no right to obtain judicial review based on the 
Board's decision (as described in Sec.  405.1877(a)(3) and (b)(3) of 
this subpart).
    (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 EJR. 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--
    (i) The Administrator renders timely a final decision reversing the 
Board, finding the Board has jurisdiction over the matter at issue, and 
remanding to the Board; or
    (ii) A court reverses the Board's or Administrator's decision as to 
jurisdiction, the Administrator remands to the Board, 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 EJR 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 (as described in Sec.  
405.1842(g)(1) and

[[Page 30256]]

Sec.  405.1875(e)(4) of this subpart), 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) file(s) 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 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 (as described in Sec.  405.1840(d) and 
Sec.  405.1877(a) of this subpart). 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 subpart.
    (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 on some other basis) pertaining to a legal 
question that is allegedly relevant to a specific matter at issue in a 
Board appeal to which the provider is a party and that is allegedly 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 (as described in Sec.  
405.1842(g)(1) and Sec.  405.1875(e)(4) of this subpart), 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.

0
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 of this subpart, 
the parties to all proceedings in the Board appeal include the 
provider, an intermediary, and, where applicable, any other entity 
found by the Board to be a related organization of the provider under 
the principles enunciated in Sec.  413.17 of this chapter.
    (b) Neither the Secretary nor CMS may be made a party to 
proceedings in a Board appeal.
    (1) The Board may call as a witness any employee or officer of the 
Department of Health and Human Services or CMS having personal 
knowledge of the facts and the issues in controversy in an appeal.
    (2) The regulations at 45 CFR Part 2 (Testimony by employees and 
production of documents in proceedings where the United States is not a 
party) apply as to whether such employee or officer will appear.
    (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 (as described in Sec.  405.1863 of this subpart). CMS--
    (1) May file amicus curiae (friend of the court) briefing papers 
with the Board in accordance with a schedule to be determined by the 
Board.
    (2) Must promptly mail copies of any documents filed with the Board 
to each party to the appeal.
    (e) A nonparty other than CMS may seek leave from the Board to file 
amicus curiae briefing papers with the Board.
    (f) The Board may exclude from the record all or part of an amicus 
curiae briefing paper. When the Board excludes from the record all or 
part of an amicus curiae briefing paper submitted by CMS, it states for 
the record its reason(s) in writing.
0
22. Section 405.1845 is amended by--
0
A. Revising the section heading.
0
B. Revising paragraphs (c) and (d).
0
C. Adding paragraphs (e) through (h)
    The revisions and additions read as follows:


Sec.  405.1845  Composition of Board; hearings, decisions, and remands.

* * * * *
    (c) Composition of the 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)(i), (a)(2)(iii), and 
(a)(2)(iv), but a quorum is not required for other Board actions.
    (2) Three Board members, at least one of whom 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 (as described in Sec.  405.1871 of this subpart) 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 (as 
described in Sec.  405.1867 of this subpart).
    (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 (as described in Sec.  405.1851 of this subpart). 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

[[Page 30257]]

(as described in Sec.  405.1843(a) of this subpart) 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 submitted 
to the Board and included in the record (as described in Sec.  405.1865 
of this subpart).
    (g) 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 (as described in Sec.  405.1855 of this subpart), and any 
written argument or comments timely submitted to the Board (as 
described in Sec.  405.1865 of this subpart).
    (h) Remands. (1) Except as provided in paragraph (h)(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 subpart), 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) Issue the remand order in writing; and
    (iii) Mail the remand order promptly to the parties and any 
affected nonparty, 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 (as described in Sec.  
405.1875(a)(2)(iv) of this subpart).

0
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 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; and
    (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 as to when the provider(s) and the intermediary must 
submit position papers to the Board.
    (2) The Board has the discretion to extend the deadline for 
submitting a position paper. 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 (as described in Sec.  
405.1840 of this subpart), and the merits of the provider's Medicare 
payment claims for each remaining issue.
    (3) In the absence of a Board order or general instructions to the 
contrary, 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 in a timeframe to 
be decided by the Board through a schedule applicable to a specific 
case or through general instructions.
    (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 telephone, 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) Whether the parties can agree to submission of the case on a 
stipulated record.
    (v) Whether a party may waive appearance at an oral hearing and 
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; and
    (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, and 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 of a nonparty other 
than CMS, the Secretary or any Federal agency, the reasonable 
production of documents for inspection and copying.
    (ii) A party may also request another party to respond to a 
reasonable number of written interrogatories.
    (iii)(A) A party may not take the deposition, upon oral or written 
examination, of another party or a nonparty, unless the proposed 
deponent agrees to the deposition or the Board finds that the proposed 
deposition is necessary and appropriate under the

[[Page 30258]]

criteria set forth in Federal Rules of Civil Procedure 26 and 32(a)(3) 
in order to secure the deponent's testimony for a Board hearing.
    (B) The regulations at 45 CFR Part 2 (Testimony by employees and 
production of documents in proceedings where the United States is not a 
party) apply as to whether an employee or officer of CMS or HHS will 
appear for a deposition.
    (iv) A party may not request admissions or take any other form of 
discovery not authorized under this section.
    (3) Time limits. (i) A party's discovery request is timely if the 
date the request is served on another party or nonparty, as applicable, 
is no later than 120 days before the initially scheduled starting date 
of the Board hearing, unless the Board extends the time for the 
request.
    (ii)(A) Depositions. (1) In the absence of an order or instruction 
by the Board setting a schedule for the holding of a deposition, a 
party desiring to take a deposition must give reasonable notice in 
writing to the deponent of a scheduled deposition.
    (2) A deposition may not be held any later than 45 days before the 
initially scheduled starting of the Board hearing, unless the Board 
orders otherwise.
    (B) Responses. (1) In the absence of a Board order or general 
instructions of the Board setting a schedule for responses, responses 
to interrogatories and requests for production of documents are due 
according to the schedule agreed upon by the party serving discovery 
and the party to which the discovery is directed or within the time 
allotted by the Federal Rules of Civil Procedure.
    (2) Responses by a party to interrogatories, and responses by a 
party or nonparty to requests for production of documents must be 
served no later than 45 days before the initially scheduled starting 
date of the Board hearing, unless the Board orders otherwise.
    (iii) Before ruling on a request to extend the time for requesting 
discovery or for conducting or responding to discovery, the Board must 
give the other parties to the appeal and any nonparty subject to a 
discovery request a reasonable period to respond to the extension 
request.
    (iv) The Board has the discretion to extend the time in which to 
request discovery or conduct or respond to discovery.
    (v) If the Board grants the extension request, it sets a new 
discovery deadline and has the discretion to reschedule the hearing 
date.
    (4) Rights of nonparties. If a discovery request is made of a 
nonparty to the Board appeal, the nonparty has the rights any party has 
in responding to a discovery request. The rights of the nonparty 
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 Board.
    (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 
nonparty.
    (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 
nonparty 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.
    (iv) A self-sworn declaration describing the movant's efforts to 
resolve or narrow the discovery dispute 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)(A) The Board must issue and mail to each party and any 
affected nonparty a discovery ruling that grants or denies, in whole or 
in part, the motion to compel or the motion for a protective order, if 
applicable.
    (B) The discovery ruling must--
    (1) Specifically identify any part of the disputed discovery 
request upheld and any part rejected, and
    (2) Impose any limits on discovery the Board finds necessary and 
appropriate.
    (vii) Nothing in this section authorizes the Board to compel any 
action from the Secretary or CMS.
    (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 (as described in Sec.  405.1875(a)(3) of this subpart). 
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)of this subpart, 
or of judicial review of a final agency decision as described in Sec.  
405.1877(a) and (c)(3) of this subpart, 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) of this subpart. Upon notice to the Board that a 
party or nonparty, as applicable, intends to seek Administrator review 
of the ruling,--
    (A)(1) The Board must stay all proceedings affected by the ruling.
    (2) The Board determines the length of the stay under the 
circumstances of a given case, but in no event may the length of the 
stay be less than 15 days after the day on which the Board received 
notice of the party or nonparty's intent to seek Administrator review.
    (B) If the Administrator--
    (1) Grants a request for review, or takes own motion review, of 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.
    (2) Does not grant a request or take own motion review within the 
time allotted for the stay, the stay is lifted and the ruling is not 
subject to immediate review.

0
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 nonparty other than CMS or 
the Secretary or any Federal agency, 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 subpart.
    (ii) At the request of a party for purposes of discovery (as 
described in Sec.  405.1853 of this subpart) or an oral hearing (as 
described in Sec.  405.1845 of this subpart); and
    (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 for subpoenas requested for purposes of--
    (i) Discovery, 120 days before the initially scheduled starting 
date of the Board hearing; and
    (ii) An oral hearing, 45 days before the scheduled starting date of 
the Board hearing.

[[Page 30259]]

    (3) Subject to paragraph (4) of this section, the Board may not 
issue a subpoena any later than for purposes of a--
    (i) Discovery subpoena, 90 days before the initially scheduled 
starting date of the Board hearing; and
    (ii) 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 the deadlines specified in paragraphs 
(a)(2) and (a)(3) of this section provided the Board gives each party 
to the appeal and any nonparty subject to the subpoena request or 
subpoena a reasonable period of time to comment on any proposed 
extension. If the Board extends a deadline, it retains the discretion 
to reschedule the hearing date.
    (b) Criteria. (1) Discovery subpoenas. The Board may issue a 
subpoena for purposes of discovery if all of the following are 
applicable:
    (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) 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 (as described in Sec.  405.1855 of this subpart); and
    (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 nonparty 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 uses 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 nonparty 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; and
    (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 nonparty subject to 
the subpoena by certified mail or overnight delivery (and to any other 
party and affected nonparty 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--
    (A) The subpoena is issued in accordance with section 1878(e) of 
the Act and Sec.  405.1857 of this subpart; and
    (B) 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; and
    (iv) If applicable, require the production of specific documents 
for inspection or copying at a certain time and location.
    (3) Rights of nonparties. If a nonparty to the Board appeal is 
subject to the subpoena or subpoena request, the nonparty has the 
rights any party has in responding to a subpoena or subpoena request. 
The rights of the nonparty 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 do the 
following:
    (i) Give the party or nonparty 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)(A) Issue in writing and mail promptly to each party and any 
affected nonparty 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
    (B) 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 (as described 
in Sec.  405.1875(a)(3) of this subpart).
    (ii) Any Board action on a subpoena 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 subpart, or of judicial 
review of a final agency decision as described in Sec.  405.1877(a) and 
(c)(3) of this subpart, 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) of this subpart.
    (ii) Upon notice to the Board that a party or nonparty, 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 may the stay be less 
than 15 days after the day on which the Board received notice of the 
party or nonparty'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,

[[Page 30260]]

or remands the Board's action on 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 is not immediately reviewable.
    (e) Enforcement. (i) If the Board determines, whether on its own 
motion or at the request of a party, that a party or nonparty 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.
    (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 nonparty subject to the subpoena, and to any 
other party and affected nonparty to the appeal.

0
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 nonparty (as 
described in Sec.  405.1853(e)(4) and Sec.  405.1857(c)(3) of this 
subpart), 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 (as described in Sec.  
405.1865(b) of this subpart).
    (4) The record 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 (as described in 
Sec.  405.1855 of this subpart) 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 (as described 
in Sec.  405.1875 and Sec.  405.1877 of this subpart).
    (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 nonparty (as described in Sec.  405.1853(e)(4) and Sec.  
405.1857(c)(3) of this subpart), 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 a specific matter (whether as 
untimely or otherwise).


Sec.  405.1867  [Amended]

0
26. Section 405.1867 is amended by revising the section heading and the 
first sentence to read as follows:


Sec.  405.1867  Scope of Board's legal authority.

    In exercising its authority to conduct proceedings under this 
subpart, the Board must comply with all the provisions of Title XVIII 
of the Act and regulations issued thereunder, as well as, CMS Rulings 
issued under the authority of the Administrator as described in Sec.  
401.108 of this subchapter. * * *.

0
27. A new Sec.  405.1868 is added to read as follows:


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 should 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, the Board may--
    (1) Take other actions that it considers appropriate, such as--
    (i) Issuing a decision based on the written record submitted to 
that point; or
    (ii) Issuing a written notice to CMS describing the intermediary's 
actions and requesting that CMS take appropriate action, such as review 
of the intermediary's compliance with the contractual requirements of 
Sec.  421.120, Sec.  421.122, and Sec.  421.124 of this chapter; and
    (2) Not use its authority to take an action such as, a sanction, 
reversing or modifying the intermediary's or Secretary's 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 (as described in 
Sec.  405.1843 of this subpart).
    (2) A dismissal decision by the Board 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), and Sec.  
405.1875(e) or Sec.  405.1875(f) of this part, no later than 60 days 
after the date of receipt by the provider of the Board's decision.
    (i) 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.
    (ii) The Board may reopen and revise a final Board decision in 
accordance with Sec.  405.1885 through Sec.  405.1889 of this subpart.
    (e)(1) Any action taken by the Board under this section other than 
dismissal of the appeal is not subject to immediate Administrator 
review (as described in Sec.  405.1875(a)(3) of this subpart) or 
judicial review (as described in Sec.  405.1877(a)(3) of this subpart).
    (2) 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) of this subpart or of 
judicial review of a final agency

[[Page 30261]]

decision as described in Sec.  405.1877(a) of this subpart, as 
applicable.
    (f) Ex parte communications with Board staff concerning procedural 
matters are not prohibited.
    (g) Upon receipt of a credible allegation that a party's 
representative has divulged to that party, or to the Board information 
that was obtained during the course of the representative's 
relationship (such as legal counsel or employee) with an opposing party 
and that was intended by that party to be kept confidential, the 
Board--
    (1) Investigates the allegation; and
    (2) May take remedial action when it determines that it is 
appropriate to do so, against the party or the representative (such as 
prohibiting the representative from appearing before it, excluding such 
information from the record, or if the overall fairness of the hearing 
has been compromised, dismissing the case).

0
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 of this subpart, and the legal authority to fully 
resolve the matter in a hearing decision (as described in Sec.  
405.1842(f), Sec.  405.1867, and Sec.  405.1871 of this subpart), 
section 1878 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 (as described 
in Sec.  405.1840(b) of this subpart) 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 of this subpart; 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 of this subpart, as applicable, or in a timely request 
to add issues to a single provider appeal submitted in accordance with 
Sec.  405.1835(c) of this subpart.
    (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 of this subpart, as applicable, and the legal 
authority to fully resolve the matter in a hearing decision (as 
described in Sec.  405.1842(f), Sec.  405.1867, and Sec.  405.1871 of 
this subpart), the Board is authorized to do the following:
    (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 (as described in Sec.  405.1840(b) of this subpart) 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 resolve a specific 
matter at issue.

0
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 (as described in Sec.  
405.1840(a) and Sec.  405.1845(e) of this subpart), 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 (as described in Sec.  405.1845(g) and 
Sec.  405.1865 of this subpart).
    (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 other 
interpretive rules, general statements of policy, and rules of agency 
organization, procedure, or practice established by CMS. Where the 
Board's decision reverses or modifies an intermediary determination on 
an issue for which the policy expressed in an interpretive rule (other 
than a regulation or a CMS Ruling), general statement of policy or rule 
of agency organization, procedure or practice established by CMS would 
be dispositive of that issue (if followed by the Board), the Board 
decision must explain how it gave great weight to such interpretive 
rule or other such instruction but did not uphold the intermediary's 
determination on the issue.
    (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), Sec.  
405.1875(e), and Sec.  405.1875(f) of this subpart, no later than 60 
days after the date of receipt by the provider of the Board's decision.
    (2) 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.
    (3) A Board hearing decision that is final under paragraph (b)(1) 
of this section is subject to the provisions of Sec.  405.1803(d) of 
this subpart, unless the decision is the subject of judicial review (as 
described in Sec.  405.1877 of this subpart).
    (4) A final Board decision under paragraph (a) and (b) of this 
section may be reopened and revised by the Board in accordance with 
Sec.  405.1885 through Sec.  405.1889 of this subpart.
    (5) When the intermediary's denial of the relief that the provider 
seeks before the Board is based on procedural grounds (for example, the 
alleged failure of the provider to satisfy a time limit) or is based on 
the alleged failure to supply adequate documentation to support the 
provider's claim, and the Board rules that the basis of the 
intermediary's denial is invalid, the Board remands to the intermediary 
for the intermediary to make a determination on the merits of the 
provider's claim.


Sec.  405.1873  [Removed].

0
30. Section 405.1873 is removed and reserved.

[[Page 30262]]


0
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. 
Nonfinal 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 nonparty 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.  
405.1845(h)(3), Sec.  405.1853(e)(6)(ii), or Sec.  405.1857(d)(2) of 
this subpart, 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 (as described in Sec.  405.1871 of 
this subpart).
    (ii) A Board dismissal decision (as described in Sec.  
405.1836(e)(1) and (e)(2), Sec.  405.1840(c)(2) and (c)(3), Sec.  
405.1868(d)(1) and (d)(2) of this subpart).
    (iii) A Board EJR 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 (as described in Sec.  405.1842(h) of this subpart).
    (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 nonfinal 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 (as described in Sec.  405.1853(e)(6)(ii) of this subpart).
    (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 
(as described in Sec.  405.1857(d)(2) of this subpart).
    (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 other interpretive rules, general statements of policy, 
and rules of agency organization, procedure, or practice established by 
CMS.
    (2) A Board hearing decision meets the requirements of Sec.  
405.1871(a) of this subpart.
    (3) The Board erred in refusing to admit certain evidence or in not 
considering other submitted matter (as described in Sec.  405.1855 and 
Sec.  405.1865(b) of this subpart), or in admitting certain evidence.
    (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 
other interpretive rules, general statements of policy, and rules of 
agency organization, procedure, or practice established by CMS.
    (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. (i)(A) A party to a 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.
    (B) A nonparty other than CMS may request Administrator review 
solely of a matter described in paragraph (a)(3)(i) or (a)(3)(ii) of 
this section.
    (ii) 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 
making the request received the Board's decision or other reviewable 
action.
    (iii) A request for review (or a response to a request) must be 
submitted in writing, identify the 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 
nonparty.
    (2) Exception to time for requesting review. 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) of this subpart, 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 nonparty seeking review 
received notice of the ruling or subpoena. 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.
    (3) Notice of review. (i) 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 nonparty stating that the Board's 
decision is under review, and indicating the specific issues that are 
being considered.

[[Page 30263]]

    (ii) 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) or (c)(2) 
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 nonparty that requested review solely of a 
matter described in paragraph (a)(3)(i) or (a) (3)(ii) of this section, 
may tender written submissions regarding the review.
    (i) 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 nonparty submitting comments received the 
Administrator's notice under paragraph (c)(3) of this section, taking 
review of the Board decision or other reviewable matter.
    (ii) 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 (as described in Sec.  405.1865 of this 
subpart). The submission may include--
    (A) Argument and analysis supporting or taking exception to the 
Board's decision or other reviewable action;
    (B) Supporting reasons, including legal citations and excerpts of 
record evidence, for any argument and analysis submitted under 
paragraph (c)(4)(ii)(A) of this section;
    (C) Proposed findings of fact and conclusions of law;
    (D) Rebuttal to any written submission filed previously with the 
Administrator in accordance with paragraph (c)(4) of this section; or
    (E) A request, with supporting reasons, that the decision or other 
reviewable action be remanded to the Board.
    (d) Ex parte communications prohibited. All communications from any 
party, CMS, or other affected nonparty, concerning a Board decision (or 
other reviewable action) that is being reviewed or may be reviewed by 
the Administrator must--
    (1) Be in writing.
    (2) Contain a certification that copies were served on all other 
parties, CMS, and any other affected nonparty, as applicable.
    (3) Include, but are not limited to--
    (i) Requests for review and responses to requests for review 
submitted under paragraph (c)(1) or (c)(2) of this section; and
    (ii) Written submissions regarding review submitted under paragraph 
(c)(4) 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 may render 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 discovery or disclosure 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 of 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 
nonparty.
    (3) Any decision by the Administrator may rely on--
    (i) Applicable provisions of the law, regulations, CMS Rulings, and 
other interpretive rules, general statements of policy, and rules of 
agency organization, procedure, or practice established by CMS.
    (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 (as described in Sec.  
405.1865 of this subpart).
    (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 (as 
described in Sec.  405.1877(a)(4) of this subpart).
    (i) 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) of this subpart, unless that final 
decision is the subject of judicial review (as described in Sec.  
405.1877 of this subpart).
    (ii) The Administrator, in accordance with Sec.  405.1885 through 
Sec.  405.1889 of this subpart, may reopen and revise a final 
Administrator decision.
    (iii) 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 (as 
described in Sec.  405.1877(a)(4) of this subpart) 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) With respect to 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) With respect to 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.
    (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) In addition to ordering a remand to the Board, the 
Administrator may order a remand to any component of

[[Page 30264]]

HHS or CMS or to an intermediary under appropriate circumstances, 
including, but not limited to, for the purpose of effectuating a court 
order (as described in Sec.  405.1877(g)(2) of this subpart). When the 
intermediary's denial of the relief, that the provider sought before 
the Board and that is under review by the Administrator, was based on 
procedural grounds (such as the alleged failure of the provider to 
satisfy a time limit) or was based on the alleged failure to supply 
adequate documentation to support the provider's claim, and the 
Administrator rules that the basis of the intermediary's denial is 
invalid, the Administrator remands to the intermediary for the 
intermediary to make a determination on the merits of the provider's 
claim.

0
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 EJR provisions of 
Sec.  405.1842 of this subpart, 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 (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) of the Act.
    (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) of this subpart or, in a 
particular case, is deemed to be final by the Administrator under Sec.  
405.1875(a)(2)(iv) of this subpart; and
    (ii) Is not reversed, affirmed, modified, or remanded by the 
Administrator under Sec.  405.1875(e) and Sec.  405.1875(f) of this 
subpart 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(c) 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) of this subpart or deemed to be final by the Administrator 
in a particular case under Sec.  405.1875(a)(2)(iv) of this subpart, 
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 (as described in Sec.  
405.1875(e)(4), Sec.  405.1875(f)(1), and Sec.  405.1875(f)(4) of this 
subpart).
    (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) of 
this subpart, whether through inaction or in a written notice issued 
under Sec.  405.1875(c)(3) of this subpart, 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. When 
the Administrator decides to review, in a notice under Sec.  
405.1875(c)(3) of this subpart, any issue in a Board decision specified 
as final, or deemed as final by the Administrator, under Sec.  
405.1875(a)(2) of this subpart, and he or she subsequently renders a 
decision within the 60-day review period (as described in Sec.  
405.1875(a)(1) of this subpart), the provider has no right to obtain 
judicial review of the Board's decision under section 1878(f)(1) of the 
Act.
    (i) 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 (as described 
in Sec.  405.1877(a)(3) of this subpart).
    (ii) If the Administrator timely vacates the Board's decision and 
remands for further proceedings (as described in Sec.  
405.1875(f)(1)(i) of this subpart), 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 (as described in Sec.  405.1877(a)(3) of 
this subpart).
    (4) Administrator accepts review and timely decision is not 
rendered. If the Administrator decides to review, in a notice under 
Sec.  405.1875(c)(3) of this subpart, 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, for purposes 
of the time in which to seek judicial review. 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) of this subpart.
    (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 the regulations at 42 CFR Part 411, is not reviewable by the 
Board (as described in Sec.  405.1840(b)(1) of this subpart) 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 Subpart I of Part 405 and Subpart B of Part 478, as applicable.
    (2) Certain matters affecting payments to hospitals under the 
prospective payment system are completely

[[Page 30265]]

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) of 
this subpart.
    (3) Any Board remand order, or discovery or disclosure ruling or 
subpoena specified in Sec.  405.1875(a)(3)(i) through (a)(3)(ii) of 
this subpart, 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 nonfinal Board actions, including any such 
Board remand order, discovery or disclosure ruling, or subpoena (except 
as provided in Sec.  405.1857(e) of this subpart), is limited to review 
of a final agency decision as described in Sec.  405.1877(a) of this 
subpart.
    (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 (as described in Sec.  
405.1877(e)(2) of this subpart) 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 of this subpart 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 of 
this subpart 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, the 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) 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--
    (A) Describe the specific requirements of the court's remand order;
    (B) Require compliance with those requirements by the pertinent 
component of HHS or CMS or by the intermediary, as applicable; and
    (C) 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--
    (A) If the intermediary issues a revised intermediary determination 
after remand, the provider may request a Board hearing on the revised 
determination (as described in Sec.  405.1803(d) and Sec.  405.1889 of 
this subpart); or,
    (B) 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 (as described in 
Sec.  405.1834 and Sec.  405.1875(f)(4) of this subpart).
    (3) Exception. The provisions of paragraphs (g)(1) and (g)(2) 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.
    (h) Implementation of final court judgment. (1) When 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) of this subpart.
    (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.

0
33. Section 405.1885 is revised to read as follows:


Sec.  405.1885  Reopening an intermediary determination or reviewing 
entity decision.

    (a) General. (1) A Secretary determination, an intermediary 
determination, or a decision by a reviewing entity (as described in 
Sec.  405.1801(a) of this subpart) may be reopened, for findings on 
matters at issue in a determination or decision, by CMS (with respect 
to Secretary determinations), by the intermediary (with respect to 
intermediary determinations) or by the reviewing entity that made the 
decision (as described in Sec.  405.1885(c) of this subpart).
    (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 
is made, a revised determination or decision is appealable to the 
extent provided in Sec.  405.1889 of this subpart.
    (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) Own motion reopening of a determination not 
procured by fraud or similar fault. An own motion reopening is timely 
only if the notice of intent to reopen (as described in Sec.  405.1887 
of this subpart) 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

[[Page 30266]]

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) Request for reopening of a determination not based on fraud or 
similar fault.
    (i) 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 conclusively presumed to be the date of delivery 
by a nationally-recognized next-day courier, or the date stamped 
``Received'' by CMS, the intermediary or the reviewing entity (where a 
nationally-recognized next-day courier is not employed), unless it is 
shown by clear and convincing evidence that CMS, the intermediary, or 
the reviewing entity received the request on an earlier date.
    (ii) A request to reopen does not toll the time in which to appeal 
an otherwise appealable determination or decision.
    (iii) A request to reopen that is received within the 3-year period 
described in this paragraph is timely, notwithstanding that the notice 
of reopening required under Sec.  405.1887 of this subpart is issued 
after such 3-year period.
    (3) Reopening of a determination procured by fraud or similar 
fault. 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 
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, when 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 other interpretive rules, general 
statements of policy, and rules of agency organization, procedure, or 
practice established by CMS in effect, and as CMS understood those 
legal provisions, at the time the determination or decision was 
rendered by the intermediary. CMS may also direct the intermediary to 
reopen a particular intermediary determination or decision in order to 
implement a final agency decision (as described in Sec.  405.1833, 
Sec.  405.1871(b) and Sec.  405.1875 of this subpart), a final, non-
appealable court judgment Sec.  405.1877, 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 other interpretive rules, 
general statements of policy, and rules of agency organization, 
procedure, or practice established by CMS, 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 or Administrator. 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 or Administrator.
    (i) 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.
    (ii) The intermediary must send a copy of the notice required under 
Sec.  405.1887(a) to the Board or to the Administrator, through the 
Office of the Attorney Advisor, specifically informing that the 
matter(s) to be addressed by the reopening is currently under appeal to 
the Board or to the Administrator or is covered by the same 
determination that is under appeal.
    (4) Reopening 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), a 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) of this subpart.

0
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--
    (1) Reopening by a CMS reviewing official or the Board must be sent 
promptly to the Administrator.
    (2) Intermediary reopenings of determinations that are currently 
pending before the Board or the Administrator must meet the 
requirements specified in Sec.  405.1885(c)(3) and (c)(4) of this 
subpart.
    (b) Upon receipt of the notice required under Sec.  405.1887(a) of 
this subpart, 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 (as described in Sec.  405.1889 of this 
subpart).

0
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

[[Page 30267]]

decision by a reviewing entity after the determination or decision is 
reopened as provided in Sec.  405.1885 of this subpart, 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 of 
this subpart are applicable.
    (b)(1) 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.
    (2) 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

0
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).


0
37. The heading for part 413 is revised to read as set forth above.


0
38. Section 413.30 is amended by revising the last sentence in each of 
paragraphs (c)(1) and (c)(2) to read as follows:


Sec.  413.30  Limitations on payable costs.

* * * * *
    (c) * * *
    (1) * * *. The time required by 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.
    (2) * * *. The time required by the intermediary 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 Board 
hearing as specified in Sec.  405.1813 and Sec.  405.1836 of this 
chapter, respectively.
* * * * *

0
39. Section 413.40 is amended by revising paragraph (e)(5) to read as 
follows:


Sec.  413.40  Ceiling on the rate of increase in hospital inpatient 
costs.

* * * * *
    (e) * * *
    (5) Extending the time limit for review of NPR. The time required 
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 
Board hearing as specified in Sec.  405.1813 and Sec.  405.1836 of this 
chapter, respectively.
* * * * *

0
40. Section 413.64 is amended by revising the last sentence in 
paragraph (j)(1) to read as follows:


Sec.  413.64  Payments to providers: Specific rules.

* * * * *
    (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

0
41. 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]

0
42. In Sec.  417.576--A. Amend paragraph (d)(4) by removing the phrase 
``a hearing in accordance with subpart R of part 405 of this chapter'' 
and adding in its place ``a hearing in accordance with the requirements 
specified in Sec.  405.1801(b)(2) of this chapter''; and
0
B. Amend paragraph (e)(2) by removing the phrase ``a hearing under 
subpart R of part 405 of this chapter'' and adding in its place ``a 
hearing in accordance with the requirements specified in Sec.  
405.1801(b)(2) of this chapter''.


Sec.  417.810  [Amended]

0
43. In Sec.  417.810--
0
A. Amend paragraph (c)(2) by removing the phrase ``a hearing as 
provided in part 405, subpart R of this chapter'' and adding in its 
place ``a hearing in accordance with the requirements specified in 
Sec.  405.1801(b)(2) of this chapter''; and
0
B. Amend paragraph (d)(3) by removing the phrase ``a hearing on the 
determination under the provisions of part 405, subpart R of this 
chapter'' and adding 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; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: November 6, 2007.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: February 5, 2008.
Michael O. Leavitt,
Secretary.
    [Editorial Note: The Office of the Federal Register received this 
document on May 15, 2008.]
 [FR Doc. E8-11227 Filed 5-22-08; 8:45 am]
BILLING CODE 4120-01-P