When a health care provider disagrees with a Medicare graduate medical education (GME) reimbursement determination by its Medicare Administrative Contractor (MAC), the provider may bring its claims before an administrative decision-making body called the Provider Reimbursement Review Board (PRRB or Board), an independent panel that hears Medicare provider appeals of cost report determinations by payment contractors. The PRRB's procedural requirements are strict, and the Board will dismiss for lack of jurisdiction any claims that do not meet its requirements.

The US District Court for the Eastern District of New York, in a decision issued on July 13, 2016, granted summary judgment in favor of the government in a case challenging a PRRB decision of non-jurisdiction over a hospital's GME payment-related appeal. Lutheran Medical Center v. Burwell, Lutheran Med. Ctr. v. Burwell, 2016 U.S. Dist. LEXIS 90966 (E.D.N.Y. July 13, 2016).

In this case, the provider had previously properly challenged its MAC's determination of its fiscal year (FY) 2000 resident full-time equivalent (FTE) calculation. However, in challenging its FTE counts for FYs 2001 and 2002, the provider never raised, in either its PRRB hearing request or its final position paper, the potential impact of its FY 2000 appeal on those later years. The only time during the later years’ PRRB appeal processes that the provider mentioned its desire to “carry forward” the outcome of the FY 2000 appeal was in a letter the provider submitted to the MAC prior to hearing. Because the PRRB rules require that a provider "specifically identify the items in dispute" with regard to each issue (Rule 8.1), the Board dismissed jurisdiction over any carry-forward element in the FY 2001 and FY 2002 challenges. In upholding the PRRB's dismissal of the provider's challenge to the carry-forward effect of alleged improper FTE counts, the District Court noted that "various courts have upheld applications of the PRRB’s stringent rules, because they 'are reasonable and necessary to the smooth functioning of the agency appellate process, and therefore cannot be considered arbitrary and capricious or an abuse of agency discretion'" (citing UHI, Inc. v. Thompson, 250 F.3d 993, 996-97 (6th Cir. 2001)). The District Court was not persuaded by the provider's argument that any change to the FTE count for FY 2000 should “automatically adjust” the count for FYs 2001 and 2002, holding that even assuming that the provider would have prevailed on the merits, “the Hospital failed to comply with the strict requirements set forth in the Secretary’s regulations and the PRRB rules to put the issue properly before the PRRB.”

The lesson for providers is clear: in appealing Medicare payment determinations, be specific to preserve all arguments! As noted above, PRRB rules require that a provider "specifically identify the items in dispute" with regard to each issue (Rule 8.1). In the GME reimbursement context, where payments are based on three-year rolling averages and prior-year bed counts, a provider should therefore be careful to include in its arguments, from the very beginning of the appeal, a discussion of any disputes related to prior-year appeals and determinations that the provider believes should carry through to the current year.