42 CFR 414.423 - Appeals Process for Termination of Competitive Bidding Contract.

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§ 414.423 Appeals Process for Termination of Competitive Bidding Contract.

This section implements an appeals process for suppliers that CMS has determined are in breach of their Medicare DMEPOS Competitive Bidding Program contracts and where CMS has taken action to terminate the supplier's contract. Except as specified in this regulation termination decisions made under this section are final and binding.

(a) Terminations for breach of contract. CMS may terminate a supplier's DMEPOS Competitive Bidding Program contract when it determines that the supplier has violated any of the terms of its contract.

(b) Notice of termination -

(1) CMS notification. If CMS determines a supplier to be in breach of its contract either in part or in whole, it will notify the Medicare DMEPOS supplier of the termination by certified mail.

(2) Content of the notice. The CMS notice will include the following:

(i) The reasons for the termination.

(ii) The right to request a hearing by a CBIC Hearing Officer, and depending on the nature of the breach, the supplier may also be allowed to submit a CAP in lieu of requesting a hearing by a CBIC Hearing Officer, as specified in paragraph (c)(1)(i) of this section.

(iii) The address to which the written request for a hearing must be mailed.

(iv) The address to which the CAP must be mailed, if applicable.

(v) Penalties that will accompany the termination, such as not being eligible to bid in future rounds of competitive bidding.

(vi) The effective date of termination is 45 days from the date of the notification letter unless a timely hearing request is filed or a corrective action plan (CAP) is submitted within 30 days of the date on the notification letter.

(c) Corrective action plan (CAP) -

(1) Option for corrective action plan (CAP).

(i) CMS has the option to allow a DMEPOS supplier to provide a written corrective action plan (CAP) to remedy the deficiencies identified in the notice, when CMS determines that the delay in the termination date caused by allowing a CAP will not cause harm to beneficiaries, for example, we would not allow a CAP if the supplier has been excluded from any Federal program, debarred by a Federal agency, or convicted of a healthcare-related crime.

(ii) If a supplier chooses not to submit a CAP or if CMS determines that a supplier's CAP is insufficient, the supplier may request a hearing on the termination.

(2) Submission of a CAP.

(i) A corrective action plan must be submitted within 30 days from the date on the notification letter. If the supplier decides not to submit a corrective action plan the supplier may within 30 days of the date on the termination letter request a hearing by a CBIC hearing officer.

(ii) Suppliers will only have the opportunity to submit a CAP when they are first notified that they have been determined to be in breach of contract. If the CAP is not acceptable or properly implemented, suppliers will receive a subsequent termination notice.

(d) The purpose of the corrective action plan.

(1) For the supplier to eliminate all of the deficiencies that were identified in the notice to terminate its contract to avoid contract termination.

(2) To identify the timeframes by which the supplier will implement each of the components of the CAP.

(e) Review of the CAP.

(1) The CBIC will review the CAP. Suppliers may only revise their CAP one-time during the review process based on the deficiencies identified by the CBIC. The CBIC will submit a recommendation to CMS concerning whether the CAP includes the steps necessary to remedy the contract deficiencies as identified in the notice of termination.

(2) If CMS accepts the CAP, including supplier's designated timeframe for its completion; the supplier must provide a follow-up report within 5 days after the supplier has fully implemented the CAP that verifies that all of the deficiencies identified in the CAP have been corrected in accordance with the timeframes accepted by CMS.

(3) If the supplier does not implement an acceptable CAP the supplier will receive a subsequent notice that their contract will be terminated within 45 days of the date on that notice.

(f) Right to request a hearing by the CBIC hearing officer (HO).

(1) A supplier who has received a notice that CMS considers the supplier in breach of contract or that the supplier's CAP is not acceptable has the right to request a hearing before an HO who was not involved with the original determination.

(2) A supplier who wishes to appeal the termination notice must submit a written request to the CBIC. The request for a hearing must be received by the CBIC within 30 days from the date of the notice to terminate.

(3) A request for hearing must be in writing and submitted by an authorized official of the supplier.

(4) The appeals process for the Medicare DMEPOS Competitive Bidding Program is not to be used in place of other existing appeals processes that apply to other parts of the Medicare.

(5) If the supplier is given the opportunity to submit a CAP and a CAP is not submitted and the supplier fails to timely request a hearing, this will result in the termination of the supplier's DMEPOS Competitive Bidding Program contract effective 45 days from the date on the notice to terminate received by the supplier.

(g) The CBIC Hearing Officer schedules and conducts the hearing.

(1) Within 30 days from the receipt of the supplier's timely request for a hearing the hearing officer will contact the parties to schedule the hearing.

(2) The hearing may be held in person or by telephone at the supplier's request.

(3) The scheduling notice to the parties must indicate the time and place for the hearing and must be sent to the supplier 30 days before the date of the hearing.

(4) The HO may, on his or her own motion, or at the request of a party, change the time and place for the hearing, but must give the parties to the hearing 30 days notice of the change.

(5) The HO's scheduling notice must provide the parties to the hearing and the CBIC the following information:

(i) Description of the hearing procedure.

(ii) The general and specific issues to be resolved.

(iii) The supplier has the burden to prove it is not in violation of the contract.

(iv) The opportunity for parties to the hearing to submit additional evidence to support their positions, if requested by the HO.

(v) All evidence submitted, both from the supplier and CMS, in preparation for the hearing with all affected parties within 15 days prior to the scheduled date of the hearing.

(h) Burden of proof.

(1) The burden of proof is on the Competitive Bidding Program contract supplier to demonstrate to the HO with convincing evidence that it has not breached its contract or that termination is not appropriate.

(2) The supplier's supporting evidence must be submitted with its request for a hearing.

(3) If the Medicare DMEPOS supplier fails to submit this evidence at the time of its submission, the Medicare DMEPOS supplier is precluded from introducing new evidence later during the hearing process, unless permitted by the hearing officer.

(4) CMS also has the opportunity to submit evidence to the HO within 10 days of receiving a notice announcing the hearing.

(5) The HO will share all evidence submitted by the supplier and/or CMS, with all parties to the hearing and the CBIC within 15 days prior to the scheduled date of the hearing.

(i) Role of the Hearing Officer. The HO will conduct a thorough and independent review of the evidence including the information and documentation submitted for the hearing and other information that the HO considers pertinent for the hearing. The role of the HO includes, at a minimum, the following:

(1) Conducts the hearing and decides the order in which the evidence and the arguments of the parties are presented;

(2) Determines the rules on admissibility of the evidence;

(3) Examines the witnesses, in addition to the examinations conducted by CMS and the contract supplier;

(4) The CBIC may assist CMS in the appeals process including being present at the hearing, testifying as a witness, or performing other, related ministerial duties.

(5) Determines the rules for requesting documents and other evidence from other parties;

(6) Ensures a complete record of the hearing is made available to all parties to the hearing;

(7) Prepares a file of the record of the hearing which includes all evidence submitted as well as any relevant documents identified by the HO and considered as part of the hearing; and

(8) Complies with all applicable provisions of 42 USC Title 18 and related provisions of the Act, the applicable regulations issued by the Secretary, and manual instructions issued by CMS.

(j) Hearing Officer recommendation.

(1) The HO will issue a written recommendation to CMS within 30 days of the close of the hearing unless an extension has been granted by CMS because the HO has demonstrated that an extension is needed due to the complexity of the matter or heavy workload.

(2) The recommendation will explain the basis and the rationale for the HO's recommendation.

(3) The hearing officer must include the record of the hearing, along with all evidence and documents produced during the hearing along with its recommendation.

(k) CMS' final determination.

(1) CMS' review of the HO recommendation will not allow the supplier to submit new information.

(2) After reviewing the HO recommendation, CMS' decision will be made within 30 days from the date of receipt of the HO's recommendation.

(3) A CMS decision to terminate will indicate the effective date of the termination.

(4) This decision is final and binding.

(l) Effect of contract termination.

(1) All locations included in the contract can no longer furnish competitive bid items to beneficiaries within a CBA and the supplier cannot be reimbursed by Medicare for these items after the effective date of the termination.

(2) A contract supplier whose contract has been terminated must notify all beneficiaries who are receiving rented competitive bid items or competitive bid items received on a recurring basis, of the termination of their contract.

(i) The notice to the beneficiary from the supplier whose contract is terminated must be provided no later than 15 days prior to the effective date of termination.

(ii) The notification to the beneficiaries must inform the beneficiaries that they are going to have to select a new contract supplier to furnish these items in order for Medicare to pay these items.

(m) Effective date of the contract termination.

(1) A supplier's DMEPOS CBP contract is terminated effective on the termination date specified in the notice to the supplier, unless the supplier timely requests a hearing with the HO or the supplier has submitted a CAP under paragraph (c) of this section.

(2) If a supplier requests an HO review of the CMS decision to terminate its contract, and CMS based upon the HO's recommendation terminates the supplier's contract, the effective date of the termination will be the date specified in the post-hearing notice to the supplier indicating CMS's final determination to terminate the contract.

(3) For violations of the terms of the supplier's DMEPOS CBP contract that may harm beneficiaries, such as a supplier providing an inferior product that causes harm to the beneficiary, no delays of the effective date of the termination will be allowed.

[75 FR 73623, Nov. 29, 2010, as amended at 79 FR 66265, Nov. 6, 2014]

Title 42 published on 2015-10-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 42 CFR Part 414 after this date.

  • 2015-11-16; vol. 80 # 220 - Monday, November 16, 2015
    1. 80 FR 70886 - Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2016
      GPO FDSys XML | Text
      DEPARTMENT OF HEALTH AND HUMAN SERVICES, Centers for Medicare & Medicaid Services
      Final rule with comment period.
      Effective date: The provisions of this final rule with comment period are effective on January 1, 2016, except the definition of “ownership or investment interest” in § 411.362(a), which has an effective date of January 1, 2017. Comment date: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on December 29, 2015. (See the SUPPLEMENTARY INFORMATION section of this final rule with comment period for a list of provisions open for comment.)
      42 CFR Parts 405, 410, 411, 414, 425, and 495