Three weeks ago, when I was asked to advise a client on how to apply for an Extended Repayment Plan, I turned to the Medicare Financial Management Manual (MFMM), expecting the same answer as recent references; however, I was shocked to learn that the rules had changed. Given that the Medicare manuals (Internet-only manuals or IOMs) contain a majority of the interpretative guidelines and policies related to the Medicare and Medicaid programs, it is important for DME providers to know how the IOMs are revised in order to understand the importance of always referring to an IOM to answer a question.
Rules vs. Guidelines
The Administrative Procedures Act (APA) governs how federal agencies (i.e., CMS) formulate rules. A rule is defined as the “whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret or prescribe law or policy or describing the organization, procedure or practice requirements of an agency.” Most agencies develop rules through the notice-and-comment rulemaking process if they are formulating legislative rules. Legislative rules are rules which create new law, rights or duties. Unless notice or hearing is required by statute, interpretive rules, general statements of policy or rules of agency organization, procedure or practice (like IOMs) do not have to go through the formal or informal rulemaking process as mandated by the APA. Although the APA does not provide a definition for interpretive rules, courts have defined interpretive rules as rules that clarify, interpret or explain existing law, state an administrative officer’s understanding of a statutory or regulatory term and/or remind affected parties of their responsibilities under existing law. Interpretive rules are documents that can take the form of regulatory guides, manuals, bulletins or policy statements.
IOM Revisions
IOMs are revised on a specific implementation date, which is typically provided in the revision publication itself, unless an exception applies. CMS uses four methods to revise the IOMs: (i) IOM revisions (themselves); (ii) one-time notifications; (iii) business requirements or (iv) confidential requirement templates. On its website, CMS publishes a Quarterly Provider Update, which includes regulations and major policies under development, regulations and major policies completed or canceled and new or revised IOM instructions. There is no law governing how often IOMs must be revised. Most commonly, IOMs are revised: (a) to reflect changes in policies and procedures related to new regulations or amendments to existing regulations and/or (b) in response to judicial precedent.
Significant Changes
Courts have prohibited CMS from implementing provisions to manuals that are disguised as rules. For example, the court in Montefiore Medical Center v. Leavitt, 578 F.Supp.2d 129 (D.D.C. 2008), held that the addition of § 2534.5 to Medicare’s Provider Reimbursement Manual (PRM § 2534.5) was subject to the notice-and-comment requirements of the APA because PRM § 2534.5 was a substantial departure from prior interpretations of cost limit exceptions when skilled nursing facilities provided atypical services to Medicare beneficiaries. For 15 years, CMS allowed reimbursements of all reasonable costs up to and exceeding the cost limit incurred in providing atypical services. CMS then issued PRM § 2534.5 without following the notice-and-comment rulemaking procedure. PRM § 2534.5 established that the amount of the atypical services exception would be measured not from the cost limit, but from 112 percent of the SNF’s peer group mean. PRM § 2534.5 was applied retroactively and Montefiore was reimbursed significantly less than its actual cost in 1991 and 1993. Suppliers should always look to IOMs for regulatory questions, because CMS may have recently changed its interpretation of the rule. If the IOM revision is significantly different from previous versions, consider notifying an attorney, who can file an administrative lawsuit.
