20 CFR 405.1885
Where intermediary rendered its initial determination, reopened it at a later time to correct error made in reimbursing provider; provider appealed on basis it was inequitable for an intermediary to reopen a cost report to correct its own error, held, regulations and general instructions require the intermediary to correct any material errors or mistakes it may make to the extent it is not foreclosed from doing so by the 3-year limitation.
The sole issue in this appeal is the legality and propriety of the Blue Cross Plan's reopening in August 1973 of the provider's cost report for the fiscal year ended September 30, 1969, to correct its own error. The cost report was originally settled in June of 1971.
The Plan reopened the 1969 cost report to correct an error which it had made in reimbursing the provider for its medicare deductible and coinsurance bad debts, where the hospital deductible and coinsurance charges to beneficiaries for outpatient services exceed its cost for rendering such services and exceed the Part B Supplementary Medical Insurance Benefits bad debts, the excess is to be used to reduce allowable bad debts for Part A Hospital Insurance Benefits. The Plan in settling the 1969 cost report failed to make this offset and reopened the report in 1973 to correct the error. The provider does not dispute the legality of the adjustment but contends that it is inequitable for the Plan to reopen a cost report to correct its own error.
While it is true that the reason for reopening the provider's cost report flowed from the Plan's mistake, regulations and general instructions require the Plan to correct any material errors or mistakes it may make to the extent it is not foreclosed from so doing by the 3-year limitation rule of Social Security Regulations No. 5, §405.1885(a). Basic to the successful administration of title XVIII is the concept that the fiscal intermediary will apply the law, regulations, and general instructions consistently and accurately to the cost reports of each provider. Failure to adhere to this tenet or to correct, where possible, past deviation from it would obviously result in chaotic administration of title XVIII programs. For this reason, section 405.1885(a) of Regulations No. 5, empowers an intermediary to reopen settled cost reports and section 405.1885(b) empowers the Social Security Administration to order an intermediary to reopen a settled cost report, where the intermediary settlement is inconsistent with the law, regulations, or general instructions. One of the situations requiring reopening is where an intermediary determination is found to be inconsistent with the law, regulations, and general instructions. It should be noted that reopening in such a circumstance is required without regard to whether or not the result is to increase or decrease the amount of program reimbursement due to the provider.
In this case it is clear the Plan had misapplied the law in settling the provider's 1969 cost report and that the reopening occurred within three years of the notice of determination of the amount of program reimbursement. Accordingly, the Hearing Officer affirms the reopening and the adjustments made pursuant to such reopening.