Category Archives: Final Rulings

Medicare Alert: Mere Documentation Mistakes May Lead to Termination of Your Medicare Enrollment Contract

Another new CMS rule, released yesterday, increases Medicare provider oversight for fraud, waste, and abuse even more.  See CMS Press Release below.

Now CMS can revoke enrollment of Medicare providers who are found to engage in abusive billing practices by billing for services that do not meet the Medicare requirements.

Well, that sounds great on its face.  We don’t want Medicare providers billing for services that do not meet the Medicare requirements.  We all agree.

Here’s the problem with this very broad new rule…

Who determines whether the Medicare services meet Medicare requirements?  A recover audit contractor (RAC) who is paid on contingency fee?  SeeNC Medicaid RACs Paid to Find Errors by Providers, No Incentive to Find Errors by DMA.”  Even though that blog is speaking about NC RACs, it is analogous to Medicare RACs.

I foresee two longterm consequences of this new rule:

1. North Carolina will adopt the same rules for Medicaid billing errors.  And we know how accurate those alleged billing errors have been…SeeThe Exaggeration of Tentative Notices of Overpayment.”

2. On the federal level, Medicare providers are going to start seeing more terminations of their Medicare contracts for supposed billing mistakes.  Perhaps without due process.  Then providers will have to fight to prove that a property right has been violated.

We shall see…

Here is the CMS press release:

New CMS rules enhance Medicare provider oversight;strengthens beneficiary protections

CMS Administrator Marilyn Tavenner today announced new rules that strengthen oversight of Medicare providers and protect taxpayer dollars from bad actors. These new safeguards are designed to prevent physicians and other providers with unpaid debt from re-entering Medicare, remove providers with patterns or practices of abusive billing, and implement other provisions to help save more than $327 million annually.

“The changes announced today are common-sense safeguards to preserve Medicare for generations to come, while making the rules more consistent for all providers that work with us,” Administrator Tavenner said. “The Administration is committed to using all appropriate tools as part of its comprehensive program integrity strategy shaped by the Affordable Care Act.”

CMS Deputy Administrator and Director of the Center for Program Integrity, Shantanu Agrawal, M.D., said, “CMS has removed nearly 25,000 providers from Medicare and the new rules help us stop bad actors from coming back in as we continue to protect our patients. For years, some providers tried to game the system and dodge rules to get Medicare dollars; today, this final rule makes it much harder for bad actors that were removed from the program to come back in.”

CMS is using new authorities created by the Affordable Care Act to clamp down on Medicare fraud, waste and abuse. CMS currently has in place temporary enrollment moratoria on new ambulance and home health providers in seven fraud hot spots around the country. The moratoria are allowing CMS to target its resources in those areas, including use of fingerprint-based criminal background checks. These and other successes continue to protect the Medicare Trust Funds. CMS has demonstrated that removing providers from Medicare has a real impact on savings. For example, the Fraud Prevention System, a predictive analytics technology, identified providers and suppliers who were ultimately revoked, and prevented $81 million from being paid.

New changes announced today allow CMS to:

  • Deny enrollment to providers, suppliers and owners affiliated with any entity that has unpaid Medicare debt; this will prevent people and entities that have incurred substantial Medicare debts from exiting the program and then attempting to re-enroll as a new business to avoid repayment of the outstanding Medicare debt.
  • Deny or revoke the enrollment of a provider or supplier if a managing employee has been convicted of a felony offense that CMS determines to be detrimental to Medicare beneficiaries. The recently implemented background checks will provide CMS with more information about felony convictions for high risk providers or suppliers.
  • Revoke enrollments of providers and suppliers engaging in abuse of billing privileges by demonstrating a pattern or practice of billing for services that do not meet Medicare requirements.

Supreme Court Will Decide Whether Citizens in NC and 26 Other States Can Receive Tax Credits for Health Care Premiums!!

With a decision that, I can only imagine, ricocheted against the White House walls, the Supreme Court granted certiorari to hear King v. Burwell this past Friday, November 7, 2014, despite Obama’s administration’s request for the Supreme Court to postpone granting certiorari in order to wait for a D.C. circuit to re-visit an opinion, the Halbig ruling.

The Supreme Court’s decision in King could, potentially, have devastating consequences on the Affordable Care Act (ACA). However, I write that last sentence with an asterisk. Journalists across the country are entitling articles, “Obamacare Is Doomed! Everybody Panic!”, “The Supreme Court Might Gut Obamacare. Your State Could Save It,” and “Obamacare vs. Supreme Court.” These titles to articles are misleading, at best, and factually incorrect, at worst. King v. Burwell is actually not an attack on the ACA. But I will explain later…

First of all, what the heck is certiorari…or “cert”, as many attorneys call it?

A writ of certiorari is actually an order from a higher court to a lower court demanding a record in a case so that the higher court may review the lower court’s decision. A writ of certiorari is the instrument most used by the Supreme Court to review cases. The Supreme Court hears such a small, minute fraction of lawsuits that when the Supreme Court “grants cert,” it is a big deal.

I have written in the past about these same two appellate court cases, which were both published July 22, 2014, within hours of one another, regarding the Health Care Premium Subsidies Section of the Affordable Care Act. These two cases yield polar opposite holdings. In Halbig v. Burwell, the D.C. Circuit Court found that the clear language of the ACA only allows the health care premium subsidies in states that created their own state-run health care exchanges, i.e, residents in NC along with 35 other states would not be eligible for the subsidies. See my blog: Halbig: Court Holds Clear Language of the ACA Prohibits Health Care Subsidies in Federally-Run Exchanges.

Juxtapose the 4th Circuit Court’s decision in King v. Burwell, which held that “For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion.”

So the two cases came to two entirely different conclusions. Halbig: ACA is clear; King: ACA is ambiguous.

Well, for everyone else, that is as clear….as mud.

When the D.C. court decided Halbig, it was not an en banc decision. In English, this means that the entire bench of judges in the D. C. Circuit did not hear the case, only a panel of three (which is the usual way for a case to be heard on appeal to a federal circuit). The Obama administration, along with other proponents of the ACA, hoped that the U.S. Supreme Court would deny cert to King until the D.C. court could re-visit its decision, this time en banc.

Yet, this past Friday, the Supreme Court opted to consider King v. Burwell.

The sole issue to be decided is: Whether the Internal Revenue Service may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government under Section 1321 of the Patient Protection and Affordable Care Act.

How is King v. Burwell NOT an attack on the ACA?

The plaintiffs in King are not asking the Supreme Court to strike down the ACA, even, in part. They are asking the Court to uphold the plain language of the ACA by holding that the IRS’s interpretation of the ACA is erroneous. Let me explain…

Section 1311 directs states to establish exchanges, and Section 1321 directs the federal government to establish exchanges “within” any state that opts to not set up its own state-run exchange, e.g., NC.

Section 1401 authorizes subsidies for people whose household income falls between 100 and 400% of the federal poverty level, who are not eligible for qualified employer coverage or other government programs, and who enroll in coverage “through an Exchange established by the State.” (emphasis added). These 3 criteria are crystal clear based on the plain language of the statute.

The statute makes no provision for subsidies in states that opt not to create their own exchange but, instead, allow the federal government to create an exchange within its state.

The ACA was intended to create penalties if the states do not establish their own exchanges. For example, the subsidies are not allowed to citizens of states without state-created exchanges.

In August 2011, the IRS issued a proposed rule [add link] announcing it would provide tax credits (and implement the resulting penalties) in states with federal exchanges, too. IRS officials later admitted to Congress that they knew the statute did not authorize them to issue tax credits through federal exchanges…Oops…

The proposed rule received much negative feedback based on the fact that the IRS appeared to have no statutory basis for the rule. Nonetheless, the proposed rule was finalized in May 2012, and lawsuits ensued…

Oklahoma began the litigation with Pruitt v. Burwell in September 2012. In September 2014, a federal district court held that the plain language of the ACA does not allow subsidies in states with federally-run exchanges. In May 2013, Halbig v. Burwell was filed, and in September 2013, King v. Burwell was filed.

So, much to the contrary of popular belief, these lawsuits are not “against the ACA” or “proving the unconstitutionality of the ACA.” Instead, these lawsuits are “against” the IRS interpreting the ACA to allow tax credits for all states, even if the state has a federally-run exchange.

Will it negatively impact the ACA if the plaintiffs win? That would be a resounding yes.

Oral argument could be as soon as March 2015.

Halbig: Court Holds Clear Language of the ACA Prohibits Health Care Subsidies in Federally-Run Exchanges

Remember my post, “The Great and Powerful ACA: Are High, Inflated Premiums Hiding Behind the Curtain?” I warned of the possible consequences of Halbig v. Burwell…and it happened.

Halbig v. Burwell was decided earlier today.

The Halbig court held that the Internal Revenue Service (IRS) went too far in extending subsidies to those who buy insurance through the federally run, Healthcare.gov website.

The Halbig court ruled that the subsection of the ACA that allows high insurance premium tax credits, according to the plain language of the statute, only applies to those individuals enrolled “through an exchange established by the state.” (emphasis added). Therefore, if Halbig is upheld on en banc review by the D. C. Circuit (see below) or on appeal to the U. S. Supreme Court, residents who reside in two-thirds (or 36) of the states that did not establish state-run health care exchanges (including NC), will not benefit from the health care subsidies.

Looking at the decision through a purely objective, legal lens, I believe the federal court of appeals is correct in its ruling. I also agree that the ruling will have drastic and devastating consequences for the ACA and the people who would have benefited from the health care subsidies.

However, the law governing statutory construction and interpretation is clear. Statutory interpretation is the process by which courts interpret legislation.

For years, the U.S. Supreme Court has been explicit on statutory interpretation. “We begin with the familiar canon of statutory construction that the starting point for interpreting a statute is the language of the statute itself. Absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive.” Consumer Product Safety Commission et al. v. GTE Sylvania, Inc. et al., 447 U.S. 102 (1980).

In other words, if the words of a statute are unambiguous, then the statutory interpretation ends. The clear words of the statute must be followed.

Let me give an example of ambiguous language:

A magazine printed the following: “Rachel Ray enjoys cooking her family and her dogs.” If that were true, Rachel Ray’s family and dogs would be very upset. I am sure what the editor meant to write was “Rachel Ray enjoys cooking, her family, and her dogs.”

It is amazing how important a comma is.

The Halbig court held that the section of the ACA allowing health care subsidies only apply to those enrolled in an exchange established by the state is not ambivalent. Thus, according to statutory interpretation rules, the judicial inquiry ends.

So what happens now?

A request for an en banc ruling by the D. C. Circuit is the next step for Department of Justice. An en banc ruling is a decision made by all the justices, or the entire bench, of an appeals court, instead of a panel selected by the bench. In this case, three federal judges sat on the panel and the case was decided 2-1. An appeals court can only overrule a decision made by one of its panels if the court is sitting en banc.

Looking beyond any en banc ruling, the case could, potentially, be heard by the U.S. Supreme Court, especially in light of the importance of the decision and the fact that a 4th Circuit Court of Appeals ruled the opposite way literally hours after Halbig was announced. See David King, et al. v. Burwell, et al.

The Fourth Circuit found the ACA ambiguous, and it states, “For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion. We thus affirm the judgment of the district court.”

Bizarre that two courts hold opposing positions on the same issue and publish both decisions on the same day.  It reminds of the old Sam the Sheepdog cartoon, “Duh! Which way did he go? Which way did he go, George?”

Finally, in closing, and on a personal note, I would like to dedicate this blog to my lab-doberman mix, Booker T, who, sadly, passed Sunday.  He was my best friend for over 14 years.  You will be greatly missed, Booker T.  Rest in peace.

Booker T

High Court to Decide Whether Agencies Like CMS Can Flip-Flop Decisions

Do you know anyone who constantly changes his or her mind? Sometimes changing your mind can have drastic consequences. Think about it in the aspects of politics. Imagine that Obama announces that he was switching parties to become a Republican? This would be a huge decision with drastic consequences.

As crazy as it sounds, politicians do switch sides. The most recent switch-hitter that I can recall is Charlie Crist of Florida. Republican Crist served as Florida’s governor from 2007 to 2011. In December 2011, Crist officially changed his party affiliation to Democrat. More famously, Ronald Reagan began his political career as a Democrat. Hillary Clinton used to be a Republican. These changes had profound impact.

Now imagine that the Supreme Court rules one way, then overturns itself. There would be drastic consequences, and it does not happen often (actually the Supreme Court has overturned itself 10 times over the course of history).

Similarly, what if the Center for Medicare and Medicaid (CMS) issued a final ruling, caused millions of providers to change the way they bill Medicare or Medicaid, then changed its mind?

Can CMS change its mind after issuing a final ruling?

This is precisely what the Supreme Court will decide.

In Perez v. Mortg. Bankers Ass’n, U.S., No. 13-1041, petition filed 2/28/14, the federal government is asking the Supreme Court to review whether an agency altered its interpretation of a regulation without adhering to the Administrative Procedure Act (APA). In Perez, the Department of Labor (DOL) issued a reinterpretation of a prior ruling without obtaining notice and comment from the public.

If the Supreme Court allows the DOL to uphold its reinterpretation, this holding could have serious ramifications in the health care arena. Medicare and Medicaid are also highly regulated, like labor laws. IF DOL’s reinterpretation stands, then CMS could also issue redeterminations of prior rulings without notice and comment.

Allowing CMS to flip-flop decisions would impact providers who rely on CMS rulings in order for their practices to remain compliant.

As of now, the Supreme Court has not decided whether it will hear arguments on this case. But both petitions filed with the Supreme Court cite a circuit court split in opinions. It is more likely for the Supreme Court to grant review of a case when there is a split of opinion.