CMS regulations provide that, absent evidence of fraud, a final determination may only be reopened within 3 years of the date of the determination. 42 C.F.R. § 405.1885(b). In a recent decision by the United States Court of Appeals for the D.C. Circuit, Kaiser Foundation Hospitals v. Sebelius, 708 F.3d 226, the court concluded that this 3-year reopening limitation did not bar the reopening—solely for the purpose of correcting payments going forward—of a determination made longer than 3 years ago, which has a continuing effect on payment. At issue in Kaiser was whether the hospitals could request a redetermination of their FTE counts in the 1996 base year for purposes of adjusting their resident caps as applied to later cost reporting periods. The court held that they could.

CMS describes situations like the one at issue in Kaiser as involving “predicate facts”—situations where the “factual underpinnings” of a specific reimbursement determination were originally determined in a different fiscal period than the one under review. In the Proposed Rule, CMS expressly disagrees with the court’s decision in Kaiser, which CMS believes is contrary to the reopening regulations. Under the Proposed Rule, CMS would revise the regulations to clarify that “predicate facts” are only subject to review and potential redetermination through timely reopening of the NPR for the cost reporting period in which the predicate fact first arose or was first determined by the fiscal intermediary. CMS notes that the proposed clarification would apply to all Medicare reimbursement determinations, and not only to GME payment. Also, CMS asserts that as a clarification of “longstanding agency policy,” the proposed revision would be effective for all appeals, reopenings, or requests for reopening that are pending on or after the effective date of the final rule, even if the intermediary determination at issue preceded the effective date of the final rule.

The Proposed Rule is available from the Office of the Federal Register website by clicking here. The Proposed Rule is scheduled to be published in the July 19, 2013 Federal Register.