Background history of MTN 695838
What follows below is a chronological outline of the events leading to the CMS decision to initiate audit MTN 695838, its preliminary findings, and its disappearance.
False Claims Case dismissed
In June, 2020 the US Fourth Circuit dismisses Vincoli's FCA case finding, inter alia, that the language of PRM 4005.2 was 'sufficiently ambiguous' as to be unenforceable.
Senator Burr intervenes
Vincoli contacts his US Senator (Burr) and asks if the policy needs to be rewritten since five judges have found its language to be 'sufficiently ambiguous' as to be unenforceable. Senator Burr contacts CMS.
CMS Responds
From: Sloan, Ralph W. (CMS)
Sent: Tuesday, July 27, 2021 7:07 PM
To: Hatfield, Susan (Burr) <Susan_Hatfield@burr.senate.gov>
Subject: Congressional Inquiry - Mr. Joe Vincoli - Cost Report Issues (Ref # 659472) - CMS Response
Importance: High
Ms. Hatfield,
Thank you again for the congressional inquiry on behalf of Mr. Joe Vincoli. Mr. Vincoli is requesting clarification of Medicare's regulations on how hospital expenses for the health care services it provides to its own employees (known as “domestic care”) are to be reported on the CMS Cost Reports when the hospital uses a third-party administrator that is owned by the hospital. Palmetto GBA, the Jurisdiction M Medicare Administrative Contractor, reviewed Mr. Vincoli’s request and has provided the following response:
Palmetto GBA maintains that related-party rules apply in this situation. Costs applicable to services furnished by the third-party administrator to the hospital are includable in the allowable cost of the hospital at the cost to the related party. However, such cost must not exceed the price of comparable services that could be purchased elsewhere. Domestic claim charges must be reduced to cost. [emphasis added]. Cost must also exclude any copayments and deductibles paid by employees.
I trust that this information has been responsive to your needs. If you have any questions or need additional information in regard to this congressional inquiry, please let me know.
Thanks.
Best,
Ralph
Second Response from CMS
Vincoli then asks Senator Burr, 'If the regulation applies and is enforceable and 'Domestic claim charges must be reduced to cost' then why isn't CMS enforcing the regulation on Atrium?' CMS responds that they were not aware that Atrium owned its TPA and that they would look into the matter.
CMS instructs Palmetto GBA to begin Audit
From: Treitel, Michael (CMS/CM) <Michael.Treitel@cms.hhs.gov>
Sent: Monday, June 13, 2022 10:43 AM
To: STEPHEN WOOD <STEPHEN.WOOD@palmettogba.com>
Hi,
Just closing the loop on this, I think we recommend a deep dive on this during the FY 2024 wage index desk review. Mr. Vincoli has already been recommended to report any issues of fraud to the OIG. I have no idea if he has done that but I wouldn’t be surprised if he did. In the end he is sending us a lot of emails and it is getting harder to ignore for us. Also, we do want to make sure that the hospital is properly reporting these costs.
Is Palmetto able to look at this in September during the FY 2024 desk review?
The emails wont stop until we truly do a deep dive to see if there is any merits to the claims of Mr. Vincoli. It may be worth telling the hospital now what you need for the desk review in September so we are not scrambling in November when the time is up for the desk review.
Regarding FY 2023 wage index, we have a week to wrap up the FY 2023 wage index. If Palmetto wants to do some preliminary checking with the provider now just to make sure nothing smells wrong here that would be fine too.
Let us know your thoughts.
Thanks,
Michael Treitel
PalmettoGBA contacts Atrium
In July of 2022, PalmettoGBA notifies Atrium of audit.
Vincoli's email to CMS after receiving public records from Atrium
In July of 2023 Vincoli receives public records from Atrium that show PalmettoGBA's audit to be focused on an analysis of whether or not Atrium's relationship with MedCost meets the exception to the Related Party Rule.
Here is a portion of the text of the email I sent to CMS on August 22, 2023.
Jennifer,
I recently obtained (via a public records request) Atrium's communications with CMS/Palmetto and others as of June 31, 2023.
On Monday, May 29, 2023 at 2:02 PM, Atrium's general counsel, Erin Snyder, wrote to Stephen Wood of Palmetto:
Your request for additional information is based on the exception to Medicare’s related party rules described in 42 CFR § 413.17, which pre-supposes that it is a related party, but you have not provided a rationale or explanation as to why you have concluded that Medcost is related to CMHA for Medicare cost reporting purposes. Based on the applicable Medicare guidance, we have concluded that CMHA is not a related party based on the Medicare standards.
Please provide your analysis that supports your apparent conclusion that CMHA is related to MedCost so that we can assess the analysis and respond accordingly.
I would like to direct you to PRRB decision number 2007d26
(https://www.cms.gov/regulations-and-guidance/review
boards/prrbreview/downloads/2007d26.pdf [cms.gov])
In that ruling the Provider was using a claims administrator that it owned to administer its health plan. The question before the PRRB was whether or not the charges for health care services provided to its employees had to be reduced to cost.
The PRRB ruled:
The PRM §2144.4 recognizes the cost of health insurance premiums paid (or incurred) as an allowable fringe benefit if the benefits of the policy inure to employees. However, this section recognizes no special exclusion from the related party rules for fringe benefits. Accordingly, the limits on costs incurred between related parties are not overridden by the nature of the expenditure being employee health care costs. Under its Plan, the Provider purchased services for its employees from itself, and is therefore subject to the rules for related parties at 42 C.F.R. §413.17. Under those rules, the proper measure of allowable costs is the actual costs of the services provided.
Accordingly, the Board finds that the allowable amount of claims paid through OHN for services provided by the hospital to its employees must be reduced from charges to costs in order to eliminate the mark-up in excess of the hospital’s actual costs.
The Intermediary’s adjustment is affirmed.
PalmettoGBA changes course
PalmettoGBA auditor forwards my email internally with this message.
From: STEPHEN WOOD
To: FRANCEE SAMS; ARTEYA ROBINSON
Subject: Atrium"s Related Party Transactions
Wednesday, August 23, 2023 1:45:52 PM
Good afternoon,
Attached to this email is a message I sent to Atrium in July detailing our need for documentation to verify their exception to the related party rule. Based on the attached ruling, the health insurance costs would constitute patient care costs of their employees and would automatically preclude Atrium and Medcost from being exempt. [emphasis added]
If both of you agree, I can forward the information to CMS and we can determine what the next steps would/should be.
Thanks,
Vincoli submits FOIA to OIG for copy of Wage Index Analysis
From: <foia@oig.hhs.gov>
Date: Thu, Aug 14, 2025 at 1:39 PM
Subject: Acknowledgment of Receipt of FOIA Request #25-0584
To: <joevincoli@gmail.com>
Dear Joseph Vincoli:
This will acknowledge receipt of your Freedom of Information Act (FOIA) request received by HHS OIG on August 14, 2025.
Your request has been assigned request #25-0584 based on its receipt in this office and is being processed as expeditiously as possible.
Please refer to the request number above when corresponding.
The actual processing time will depend on the complexity of your request and whether sensitive records, voluminous records, extensive search, and/or consultation with other HHS components or other executive branch agencies are involved. There may be a charge for these records, and in some cases, the charges may be substantial.
The Department of Health and Human Services (HHS) FOIA regulations allow agencies to recover part of the costs of processing FOIA requests. The HHS FOIA regulations are available at the following web address: http://www.hhs.gov/foia/45cfr5.html.
If you have any questions, please call (202) 619-2541, or write to us at:
Freedom of Information Division
Office of Inspector General
Room 5528, Cohen Building
330 Independence Ave SW
Washington, DC 20201
Sincerely,
Cristal J. Gorham
Freedom of Information Act Unit
HHS OIG