The appellant-provider (hereafter "provider") has asked the Medicare Appeals Council to review a number of hearing decisions issued by the Administrative Law Judge concerning the provider's liability for hospital inpatient services provided to multiple beneficiaries. This order concerns fifteen hospital stays pertaining to twelve beneficiaries. (Three beneficiaries had two hospital admissions that were reviewed.) In each case the beneficiary was admitted to the hospital with a provisional diagnosis of deep vein thrombosis (DVT). To protect each beneficiary's privacy, we cite to each record using the beneficiary's initials. The copies of this order provided to the Administrative Law Judge, the provider and its attorney contain a complete list of the beneficiaries and health insurance claim numbers for the cases discussed herein.

Governing Authorities

Under section 1154 of the Social Security Act (the Act), a state peer review organization (PRO) may make an initial determination that services furnished or proposed to be furnished are not reasonable, necessary, or delivered in the most appropriate setting. ⁽¹⁾ The beneficiary, a provider, or an attending physician who is dissatisfied with the PRO's initial determination is entitled to a reconsideration by the PRO. Section 1155 of the Act provides that the beneficiary is also entitled to a hearing by an Administrative Law Judge on the issue of medical necessity if $200 or more is still in controversy after the reconsidered determination. The provider of services may not appeal the issue of medical necessity beyond the reconsideration level, but may obtain an Administrative Law Judge hearing on the issue of limitation of liability under section 1879 of the Act. See 42 CFR §473.14(c)(2)(1997). ⁽²⁾

42 CFR §411.406(e) provides, in pertinent part, that a provider that furnishes services that are not reasonable and necessary is considered to have known that the services were not covered if it is clear that the provider could have been expected to have known that the services were excluded from coverage on the basis of notification of PRO screening criteria specific to the condition of the beneficiary for whom the furnished services are at issue or its knowledge of what are considered acceptable standards of practice by the local medical community.

A copy of the PRO screening criteria applicable to these cases appears in each claim file. CMS Ruling 95-1 describes how to determine acceptable standards of practice as follows:

In situations in which services or items furnished do not meet locally acceptable standards of practice, the provider, practitioner, or other supplier is considered to have known that Medicare payment for the services or items would be denied. Providers, practitioners, and other suppliers are always responsible for knowing locally acceptable standards of practice; their local licensure is premised on the assumption that they have such knowledge. Medicare payment to providers, practitioners, or other suppliers is premised on the presumption that they have such knowledge, as evidenced by their licensure. No other evidence of knowledge of local medical standards of practice is necessary.

Medicare contractors, in determining what "acceptable standards of practice" exist within the local medical community, rely on published medical literature, a consensus of expert medical opinion, and consultations with their medical staff, medical associations, including local medical societies, and other health experts. "Published medical literature" refers generally to scientific data or research studies that have been published in peer-reviewed medical journals or other specialty journals that are well recognized by the medical profession, such as the "New England Journal of Medicine" and the "Journal of the American Medical Association." By way of example, consensus of expert medical opinion might include recommendations that are derived from technology assessment processes conducted by organizations such as the Blue Cross and Blue Shield Association or the American College of Physicians, or findings published by the Institute of Medicine.

Procedural History-Case of C.W. Hospital Stay 6/24/97-6/30/97.

These appeals arose when Sunderbruch Corporation, the Medicare peer review organization (PRO) for Nebraska, decided to review the medical necessity of the inpatient hospital admissions for the referenced beneficiaries. We describe in detail the case of C.W., because it illustrates how the majority of the inpatient admissions in the cases at issue were adjudicated by both the PRO and the Administrative Law Judge.

C.W. was admitted to Niobrara Hospital on June 24, 1997 and discharged on June 30, 1997. The PRO decided to review this admission in 1998. By letter dated November 9, 1998, the PRO advised the beneficiary's attending physician, Dr. K, that a PRO physician reviewer had "questions regarding the medical necessity of the admission." (C.W. Ex. 2). Specifically, the letter advised that the PRO was considering denying payment for the hospital stay based on the following analysis:

This 75-year old man with a history of deep vein thrombosis and currently on anticoagulation therapy was admitted with left lower extremity edema and pain. The admission INR of 1.2 would indicate an ineffective subtherapeutic dose. The diagnosis of deep vein thrombosis was made entirely on the clinical basis of swelling of the left lower extremity greater than the right. No confirmation studies were obtained before admission and no plans for a Doppler study or venogram were documented in the medical record. Acute care hospitalization for an unsubstantiated diagnosis was not appropriate.

The letter advised Dr. K that he could discuss the case with a PRO physician reviewer and/or submit additional written information within 20 calendar days of the date of the letter. After receiving comments from Dr. K, the PRO issued separate denial letters to Dr. K and the beneficiary indicating that the inpatient admission was being denied and that the provider would be held liable for the services. C.W. Ex. 4. The letter addressed to the beneficiary stated that the provider knew or should have known that the services were not covered based on its knowledge of section 210 of the Medicare Hospital Manual and the Acute Assessment Criteria. C.W. Ex. 4, page 1. The letter did not, however, explain how the manual section or screening criteria, as applied to C.W.'s admission, put the hospital on notice that the services would not be covered.

Dr. K filed a request for reconsideration by letter dated March 15, 1999. C.W. Ex. 5. One of his grounds for appeal was that:

At the time this hospitalization occurred, we were not able to perform doppler studies or venograms at our institution and I felt that the patient would be better served by treatment in the local setting rather than subjected to transfer to a facility 70 miles away given his clinical condition.

He also stated that he disagreed with the PRO reviewer's conclusion that objective confirmatory studies of deep venous thrombosis were medically necessary to justify the benefit versus the risk of ongoing anticoagulation therapy, because "clinically" the patient had deep venous thrombosis and the risk to him would have been to withhold anticoagulation therapy "since the objective confirmatory studies were not able to be performed in this rural setting at that time."

The PRO denied the request for reconsideration in a letter dated May 6, 1999. C.W. Ex. 6. The physician reviewers cited several bases for the denial, including discrepancies between Dr. K's clinical description of the patient on admission versus the nurse's intake assessment and the lack of definite diagnostic testing. One reviewer reiterated that treatment for DVT without confirmation was not indicated, noting that there are other treatment options available to patients with suspected DVT while awaiting confirmatory tests. The provider filed a request for a hearing before an Administrative Law Judge by letter dated July 6, 1999. C.W. Ex. 8.

Before the hearing the provider submitted a brief, which was not case specific, but rather addressed generally the nature of the PRO's review of its cases and whether the hospital should be held liable for services that had been denied. C.W. Ex. 20. The provider also submitted a case-specific affidavit from N.J.F., R.N. asserting that the inpatient admission had been consistent with the PRO's screening criteria. C.W. Ex. 19. Ms. F stated that the beneficiary's inpatient hospital record showed that the admission met sections 10A03 and 10A06 of the PRO's Patient Assessment Criteria and sections 10B01, 01B09, 10B02, 10B03, and 10B05 of the Acute Services Criteria.

On December 22, 1999, a consolidated hearing was held on all of the cases addressed in this order. (Given the issues and number of cases involved, the Council has had the tapes of the hearing transcribed and has inserted a copy in the C.W. record.) Although the procedural history of the PRO's review of these cases and other general issues were discussed, no case-specific evidence or legal argument was obtained during the hearing. Moreover, although the Administrative Law Judge discussed obtaining post-hearing interrogatories from a medical expert, the records before the Council do not contain any post-hearing input from a medical expert or other post-hearing evidence. ⁽³⁾

On page 1 of the hearing decision, the Administrative Law judge stated that the specific issue upon which findings of fact and conclusions of law would be made in the case of C.W. was:

whether the hospital knew or could have reasonably been expected to know that the items/services which were furnished to the patient were excluded from coverage pursuant to the standards adopted and/or published by the State Peer Review Organization.

(Emphasis added.) The hearing decision, however, does not resolve the above-stated issue, as it contains no discussion concerning whether the PRO's screening criteria were or were not met in this case. Rather, the Administrative Law Judge concluded that the provider knew or should have known that the services at issue would not be covered, inasmuch as it did not refute the statements by the PRO physician reviewers that the inpatient admission was inappropriate because specific diagnostic laboratory testing was not performed. The Council finds this reasoning unpersuasive and inconsistent with the regulations governing adjudication of PRO appeals at the Administrative Law Judge level when the appellant is the provider. First, as noted above, the provider is not permitted to challenge the medical necessity findings during an Administrative Law Judge proceeding; therefore failure to "refute" these findings cannot be construed as a concession that the reconsideration determinations on that issue were accurate. Second, because the physician reviewer's comments were made after the services at issue were provided, they could not have served as prior notice to the provider that Medicare would not consider those services medically necessary.

As noted above, a provider's knowledge that a service will not be covered can be established on the basis of notification of PRO screening criteria specific to the condition of the beneficiary for whom the furnished services are at issue or the provider's knowledge of what are considered acceptable standards of practice by the local medical community. In its request for review, the provider argues that the Administrative Law Judge did not evaluate the provider's knowledge under this standard. We agree. However, we do not agree that reversal and payment is warranted under the current record. Rather, further proceedings are necessary to evaluate whether the provider had knowledge of non-coverage based on either the PRO's screening criteria or the local community standards.

With respect to the screening criteria, we note that there is some dispute in the record concerning whether the beneficiary actually met the peripheral vascular assessment criteria; specifically, the PRO noted that the attending physician's description of the beneficiary's physical condition on admission appears to differ from the nurse's intake assessment notes. With respect to establishing knowledge under the local community medical standard, neither the PRO, appellant, or Administrative Law Judge points to any evidence of record that would establish whether an admission for a patient with the signs and symptoms presented by this beneficiary would be contrary to local community medical standards without a treatment plan that included diagnostic venogram or doppler testing. Accordingly, we are remanding this case for further proceedings, including medical expert testimony concerning local community medical standards.

Most of the other 14 cases addressed in this order have similar medical facts, procedural histories and decisions. Therefore we highlight below only the aspects of those cases that involve material differences in facts or legal analysis.

Case of C.F. Hospital stay of 7/17/97-7/22/97

This beneficiary was admitted as an inpatient with left leg and thigh pain and a provisional diagnosis of deep vein thrombosis of the left lower extremity. Admission orders included IV medications. The record indicates that after discharge she saw a vascular surgeon and had a non-invasive venous duplex scan that was clear for deep venous thrombosis. C.F. Ex. 14. The primary reason given for the PRO's denial of the hospital stay was that the diagnosis of DVT should have been confirmed by objective studies and that the medical documentation did not support the diagnosis or the need for an acute inpatient hospitalization. C.F. Ex. 7.

Ms. F's affidavit submitted to the Administrative Law Judge asserts that the beneficiary met both the Peripheral Vascular Acute Assessment and Acute Services screening criteria as manifested, inter alia, by documented pain, swelling, tenderness of an extremity (10A06), and orders for intravenous medication, anticoagulant or thrombolytic monitoring (10B01) and moist heat, elevation and strict bedrest (10B03).

In her decision, the Administrative Law Judge did not specifically rule on whether the various screening criteria referenced in Ms. F's affidavit were met and, if not, whether they provided notice to the provider that Medicare would not cover the services at issue. It appears from the body of the decision and findings, however, that the Administrative Law Judge concluded that some of the criteria were met and others were not. For example, it appears that the Administrative Law Judge concluded that the Peripheral Vascular Patient Assessment Criteria were facially met because there ware symptoms such as pain, swelling and tenderness of any extremity and that the proposed treatment satisfied the Acute Services criterion of IV medication. However, the Administrative Law Judge concluded that the hospital could not have been justified in approving the beneficiary's admission because:

• the hospital should have asked the attending physician why IV, as opposed to oral, anticoagulant medication was medically necessary, "particularly in the absence of any laboratory findings confirming the diagnosis of deep vein thrombosis," and



• the provider should have known that the screening criteria could not be met unless the diagnosis of deep venous disease was confirmed by medically accepted laboratory techniques.

(See Findings 6, 8 and 9). The Administrative Law Judge has not, however, identified any portion of the screening criteria and their instructions that would put the provider on notice that the criteria would not be met in such circumstances. Rather, it appears that the Administrative Law Judge has, in essence, found the provider liable based on its knowledge of acceptable standards of medical practice. ⁽⁴⁾ Since the record does not contain evidence of those standards, the Council finds that further proceedings are necessary in the case of C.F. as well.

Case of C. R. Hospital Stay 7/10/97-7/14/97

Similar to the cases described above, C.R. was admitted to the hospital as an inpatient with a provisional diagnosis of deep vein thrombosis of the left lower extremity. The opinions of the PRO reviewers contained in the initial notice to the hospital as well as the initial determination and reconsideration determination specifically link the necessity for confirmatory testing for DVT to the medical "standard of care" and to concerns for the beneficiary's safety. The Administrative Law Judge's decision, which is virtually identical in all material respects to the decision concerning C.F., does not sufficiently identify the basis for her conclusion that the provider had the requisite degree of knowledge that the services at issue would not be covered. Particularly in light of the PRO physicians' comments in this case, the Council finds that ME testimony concerning local community medical standards must be obtained on remand.

Cases of M.H. Hospital stays 6/25/97-7/3/97 and 3/6/98-3/13/98

Case of L.V. Hospital stay 4/3/98-4/6/98

This case is significant due to the content of the reconsideration determination, which is more detailed than those in the previously cited cases. It responds to the attending physician's appeal, which challenged the need for a doppler study or venogram because 1) the patient had a history of DVT in the same extremity, 2) the hospital could not confirm the "clinical suspicion" of DVT, and 3) clinical judgment dictated in the rural setting that the patient be admitted and placed on anti-coagulation therapy immediately.

In response, the physician reviewer stated that there were at least four differential diagnoses upon admission, there was not enough information gathered to confirm that the patient had DVT rather than one of the other diagnoses, and that because these diagnoses, particularly hemorrhage, were not ruled out before heparin was initiated, the patient was placed in some jeopardy because the diagnostic study was not done. The reviewer further stated that a diagnostic study was indicated even in a rural community. L.V. Ex. 7. This opinion squarely places the issue of local community medical standards as a question to be resolved in this case.

Case of C.T. Hospital stay 8/12/97-8/19/97

This case differs from the above-described cases in two respects. First, near the end of the hospital stay, the beneficiary was sent by ambulance to a vascular surgeon, who conducted a doppler and determined that the beneficiary had a "bleed" in the affected area. ⁽⁵⁾ Also, one of two physicians who conducted the reconsideration determination remarked as follows:

Although it is occasionally necessary to treat a deep vein thrombosis empirically until receiving a reliable confirmation by duplex Doppler venogram, etc., the patient's examination revealed a superficial area of induration below the knee. Confirmatory studies were not ordered until the fourth day of the patient's hospitalization. The vascular specialist diagnosed a condition in which coumadin and heparin were not indicated. An acute inpatient admission and heparin and coumadin were not medically necessary.

C.T. Ex. 7. The above statement is more equivocal than other physician opinions in these cases concerning the necessity of conducting dopplers and venograms for all patients who present signs and symptoms of DVT. In contrast, the opinion of one of the physician reviewers in the case of N.H. (hospital stay 6/16/97-6/20/97) suggests that it may be appropriate in some cases to defer dopplers or venograms until after the inpatient hospitalization. (In that case, acute care was not deemed appropriate without the studies "or without a clearly stated plan to obtain the studies in the future." N.H. EX. B-3.) The variation within these opinions further highlights the necessity for evidence concerning community standards of care.

Case of A.E. Hospital Stay 9/8/97-9/15/97

The PRO determinations in this case are materially different from the cases discussed above in one respect. One of the PRO physician reviewers essentially disagreed with the hospital's diagnosis, concluding that the beneficiary's clinical findings during her hospital stay were more consistent with bleeding into the affected extremity rather than deep vein thrombosis. See A.E. Ex. 7. A few of the cases listed below also contained similar opinions.

The following additional cases, which do not differ materially from those described above, are also included in this order:

• Case of A.F. Hospital stay 12/2/97-12/5/97.



• Case of L.H. Hospital stay 7/1/97-7/9/97.



• Cases of E.K. Hospital stays 6/27/97-6/31/97 and 2/3/98-2/6/98.
  
  
• Cases of I.K. Hospital stays 8/13/97-8/19/97 and 9/29/97-10/8/97.

The Medicare Appeals Council grants the requests for review of the above-referenced decisions pursuant to 20 CFR 404.967 and 404.970 for the reasons given above. The Council hereby vacates the hearing decisions and remands the cases to the administrative law judge for further proceedings, including a new decision. See 20 CFR 404.970, as incorporated by reference in 42 CFR 405.724.

Proceedings on Remand

The Administrative Law Judge will offer the appellant an opportunity for a supplemental hearing with respect to the above cases. The Administrative Law Judge will also obtain the testimony, or written interrogatories if a supplemental hearing is not held, of a medical expert qualified to testify concerning acceptable standards of practice by the local medical community concerning inpatient hospital admissions for patients with the clinical presentations described in the above cases. The medical expert shall be required, inter alia, to specify the basis for his conclusions, with specific reference to the factors described in the portion of CMS Ruling 95-1 quoted in this order. Upon completion of the proceedings, the Administrative Law Judge shall issue new decisions in the above-referenced cases concerning whether the provider should be found liable for the services at issue based on the criteria set forth in 42 CFR 411.406.

The Administrative Law Judge may take any further action not inconsistent with this remand order.

Date: March 27, 2003

M. Susan Wiley
Administrative Appeals Judge

Thomas E. Herrmann
Administrative Appeals Judge

1. PROs have recently been redesignated as Utilization and Quality Control Quality Improvement Organizations. Because all of cases before us predate this redesignation, we refer to the Sunderbruch Corporation as a PRO throughout this order.

2. In November 1999, the regulations governing PRO determinations and appeals were moved to Part 478. Because all of the services at issue in this order were provided in 1997 or 1998, we cite to the regulations as they appeared in Part 473.

3. The Council has received requests for review concerning other cases that were included in the December 22, 1999 hearing. The beneficiaries in those cases were not treated for DVT. In a few of the cases, the Administrative Law Judge proposed obtaining interrogatories from a medical expert, but after receiving objections from the appellant, decided the appeals without medical expert input. Those cases will be addressed in a separate action.

4. It appears that the Administrative Law Judge assumed that the PRO expected anyone applying the screening criteria for peripheral vascular disease to infer that the criteria required a venogram or doppler study to verify a provisional diagnosis of DVT. Our examination of the screening criteria as a whole does not support this assumption. While some of the screening criteria are very general, i.e., "physical findings of pain and swelling in an extremity," others contain very precise requirements for laboratory findings or tests. For example, one of the Patient Assessment Criteria for the gastrointestinal tract and abdomen reads: "Abdominal pain with proven ulcer by x-ray and unresponsive one week outpatient and meeting Acute Services." (Emphasis added.) Accordingly, we do not find persuasive the argument that the peripheral vascular screening criteria implicitly require that a doppler study or venogram be performed to confirm a provisional diagnosis of deep vein thrombosis.

5. Contrary to the Administrative Law Judge's findings, the beneficiary was sent to the vascular surgeon on August 18, 1997, rather than four days after admission. However, it is not clear whether the beneficiary actually returned to the hospital after the visit to the surgeon. See C.T. Ex. pp. 3-4, 10-11, and 35.