Category Archives: CMS

CMS Rulings Are Not Law; Yet Followed By ALJs

Lack of medical necessity is one of the leading reasons for denials during RAC, MAC, TPE, and UPIC audits. However, case law dictates that the treating physician should be allowed deference with the decision that medical necessity exists because the Medicare and/or Medicaid auditor never had the privilege to see the recipient.

However, recent ALJ decisions have gone against case law. How is that possible? CMS creates “Rules” – I say that in air quotes – these Rules are not promulgated, but are binding on anyone under CMS’ umbrella. Guess what? That includes the ALJs for Medicare appeals. As an example, the “treating physician” Rule is law based on case law. Juxtapose, CMS’ Ruling 93-l. It states that no presumptive weight should be assigned to a treating physician’s medical opinion in determining the medical necessity of inpatient hospital and skilled nursing facility services. The Ruling adds parenthetically that the Ruling does not “by omission or implication” endorse the application of the treating physician rule to services not addressed in the Ruling. So, we get a decision from an ALJ that dismisses the treating physician rule.

The ALJ decision actually said: Accordingly, I find that the treating physician rule, standing alone, provides no basis for coverage.

This ALJ went against the law but followed CMS Rulings.

CMS Rulings, however, are not binding. CMS Rulings aren’t even law. Yet the CMS Rulings, according to CMS, are binding onto the entities that are under the CMS umbrella. This means that the Medicare appeals process, which include the redeterminations, the reconsiderations, the ALJ decisions, and the Medicare Appeals Councils’ decisions are all dictated by these non-law, CMS Rulings, which fly in the face of actual law. ALJs uphold extrapolations based on CMS Rulings because they have to. But once you get to a federal district court judge, who are not bound by CMS, non-law, rulings, you get a real Judge’s decision, and most extrapolations are thrown out if the error rate is under 50%.

Basically, if you are a Medicare provider, you have to jump through the hoops of 4 levels of appeals that is not dictated by law, but by an administration that is rewarded for taking money from providers on the pretense of FWA. Most providers do not have the financial means to make it to the 5th level of appeal. So, CMS wins by default.

Folks, create a legal fund for your provider entity. You have got to appeal and be able to afford it. That is the only way that we can change the disproportionately unfair Medicare appeal process that providers must endure now.

Audit the Medicare Payors…It’s Not Always the Providers That Commit Fraud

Today, I am going to write about America’s managed care problem. We always talk about providers getting audited. It is about time that the payors get audited. In particular, for Medicaid, States contract with managed care organizations, which are prepaid, and, for Medicare, Medicare Advantage companies, which are prepaid.

Managed care in Medicare is MA organizations. Managed care in Medicaid is MCOs. These MCOs and MAs need to be held accountable for the misuse of funds.

Today, capitated, managed care is the dominant way in which states deliver services to Medicaid enrollees. And MA is becoming the dominant way to receive Medicare.

Under these prepaid programs, these private companies are paid a flat fee per month depending on the number of consumers to provide whatever care is required for patients based on age, gender, geography and health risk factors. The more diagnoses a person has, the more the company is prepaid. To compensate plans and providers for potential costs of care for individual patients with long-term conditions such as diabetes, heart disease or cancer, Medicare boosts the monthly payment to Medicare Advantage plans under a “risk adjustment” for each additional condition. The system differs from the traditional “fee for service” payment, in which Medicare pays hospitals and doctors directly each time they provide a service.

If companies add more risk adjustment codes to a Medicare Advantage beneficiary’s medical record to receive higher payment — but don’t spend money on the additional care — they make more money. Same as MCOs denying care or terminating providers, the tax dollars line the executive pockets instead of reimbursing providers for providing medically necessary care.

Maybe the answer is remaining with the fee-for service model. Prepaying entities creates a financial incentive to bolster beneficiaries’ health problems then cross your fingers that the health problems never come to fruition either because the beneficiary remains healthy or the health problem was fabricated.

MCOs and MA companies must be supervised by the single agency. These companies cannot have the ability to refuse medically necessary services or terminate provider at will for whatever reason with no repercussions. It’s not fair to the recipients or providers. Maybe it’s time to switch our telescopic lens from auditing providers to auditing MCOs and MAs.  Let’s get these RAC, ZPIC, and TPE auditors focused on the stewards of our tax dollars, the prepaid entities.

42 CFR §431.10 dictates a single state agency for Medicaid, which is the Department in each State. CMS is the single agency in Medicare. CMS and State Departments are ultimately responsible for the private MCOs and MAs, but really are allowing these companies autonomy to the deficit of our tax dollars.

If you recall, earlier this year, The American Hospital Association urged the Justice Department to use its authority under the False Claims Act to create a fraud task force to investigate commercial insurers that routinely deny patients access to services. This was due to the April 2022 OIG report that “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns about Beneficiary Access to Medically Necessary Care.”

Instead of audits of providers or concurrently in audits of providers, we need to audit the payors. Both MCOs and MAs. What’s good for the goose is good for the gander.

CMS Rulings Can Devastate a Provider, But Should It?

If you could light a torch to a Molotov Cocktail and a bunch of newspapers, you could not make a bigger explosion in my head than a recent Decision from a Medicare administrative law judge (“ALJ”). The extrapolation was upheld, despite an expert statistician citing its shortcomings, based on a CMS Ruling, which is neither law nor precedent. The Decision reminded me of the new Firestarter movie because everything is up in flames. Drew Barrymore would be proud.

I find it very lazy of the government to rely on sampling and extrapolations, especially in light that no witness testifies to its accuracy.

Because this ALJ relied so heavily on CMS Rulings, I wanted to do a little detective work as to whether CMS Rulings are binding or even law. First, I logged onto Westlaw to search for “CMS Ruling” in any case in any jurisdiction in America. Nothing. Not one case ever mentioned “CMS Ruling.” Ever. (Nor did my law school).

What Is a CMS Ruling?

A CMS Ruling is defined as, “decisions of the Administrator that serve as precedent final opinions and orders and statements of policy and interpretation. They provide clarification and interpretation of complex or ambiguous provisions of the law or regulations relating to Medicare, Medicaid, Utilization and Quality Control Peer Review, private health insurance, and related matters.”

But Are CMS Rulings Law?

No. CMS Rulings are not law. CMS Rulings are not binding on district court judges because district court judges are not part of HHS or CMS. However, the Medicare ALJs are considered part of HHS and CMS; thus the CMS Rulings are binding on Medicare ALJs.

This creates a dichotomy between the “real law” and agency rules. When you read CMS Ruling 86-1, it reads as if there two parties with oppositive views, both presented their arguments, and the Administrator makes a ruling. But the Administrator is not a Judge, but the Ruling reads like a court case. CMS Rulings are not binding on:

  1. The Supreme Court
  2. Appellate Courts
  3. The real world outside of CMS
  4. District Courts
  5. The Department of Transportation
  6. Civil Jurisprudence
  7. The Department of Education
  8. Etc. – You get the point.

So why are Medicare providers held subject to penalties based on CMS Rulings, when after the providers appeal their case to district court, that “rule” that was subjected against them (saying they owe $7 million) is rendered moot? Can we say – not fair, equitable, Constitutional, and flies in the face of due process?

The future does not look bright for providers going forward in defending overzealous, erroneous, and misplaced audits. These audits aren’t even backed up by witnesses – seriously, at the ALJ Medicare appeals, there is no statistician testifying to verify the results. Yet some of the ALJs are still upholding these audits.

In the “court case,” which resulted in CMS Ruling 86-1, the provider argued that:

  1. There is no legal authority in the Medicare statute or regulations for HCFA or its intermediaries to determine overpayments by projecting the findings of a sample of specific claims onto a universe of unspecified beneficiaries and claims.
  2. Section 1879 of the Social Security Act, 42 U.S.C. 1395pp, contemplates that medical necessity and custodial care coverage determinations will be made only by means of a case-by-case review.
  3. When sampling is used, providers are not able to bill individual beneficiaries not in the sample group for the services determined to be noncovered.
  4. Use of a sampling procedure violates the rights of providers to appeal adverse determinations.
  5. The use of sampling and extrapolation to determine overpayments deprives the provider of due process.

The CMS Ruling 86-1 was decided by Mr. Henry R. Desmarais, Acting Administrator, Health Care Financing Administration in 1986.

Think it should be upheld?

Medicare Investigations for False Claims Act Violations

Whenever you receive correspondence with letterhead from the Department of Justice, Attorney General’s office, you know it’s important and you better take note.

DOJ, AG

A Civil or Criminal Investigative Demand is serious. Getting any communication from the U.S. Department of Justice can be a bit unnerving. That’s particularly true for Medicare and Medicaid providers receiving a Civil Investigative Demand (“CID”) for documents and testimony.  

A CID is a tool used by the Justice Department (“DOJ”) to investigate potential violations of the False Claims Act (“FCA”). See blog. The DOJ can issue a CID whenever the DOJ has “reason to believe that any person may be in possession, custody, or control of any documentary material or information relevant to a false claims law investigation.” The bottom line is that the DOJ uses CIDs to obtain documents and identify potential witnesses so they can bring FCA suits against the recipient or others.

What is the False Claims Act anyway?

It’s a broad statute that punishes many things, one of which is making false statements to the government in connection with a claim for payment from the government. The DOJ often uses CIDs to investigate medical providers who seek payment from Medicare and Medicaid. 

Just because the Investigative Demand is labeled “civil” does not mean that the investigation is only civil; it could take a turn towards criminal. In other words, something sparked the DOJ’s attention, but, perhaps there were no allegations of criminal action, the investigation could start and the investigator could uncover something they consider criminal. An investigation earmarked as civil can turn criminal with the uncovering of one document.

On the other hand, the investigator could review all the documents and conclude that there is not even a civil violation. Very rarely, do the investigators contact you to tell you that the investigation is over and no violation was found. Most of the time, you are put on notice that you are being investigated, then hear nothing from the investigator in perpetuity.

Recently, I had an investigator inform me that the review of. my client was complete, and the file was being closed. But that’s the only time in 22 years that I was informed that nothing noncompliant was found. Usually, time just passes.

If you are found to have violated the FCA, the government can triple the amount of penalties, so the numbers get very high very quickly.

The Justice Department obtained more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2021. This is the second largest annual total in False Claims Act history, and the largest since 2014. Settlement and judgments since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $70 billion.

A much lesser known provision of the FCA is the reverse one. Not to blow everyones’ minds, but there is also a “reverse false claims” provision of the False Claims Act.  The reverse false claims provision permits the government or relators to pursue defendants who are alleged to have hidden or reduced an obligation to pay the government through false statements, or who have violated the 60-day payment rule’s obligation to return “identified overpayments.”   These claims typically have been raised in the context of cost reporting, Medicare Part C, or related to alleged failures to fulfill obligations under the 60-day payment rule.  The government and relators have increasingly relied on the reverse false claims provision to support stand-alone claims or have used it in conjunction with affirmative false claims.  However, because the reverse false claims provision is very lightly used compared to affirmative false claims provisions, there is a dearth of case law defining it or exploring its parameters.   The case law that does exist is primarily from district courts and, as the survey of case law contained herein illustrates, there is little guidance from the Circuit Courts or the U.S. Supreme Court.

Intent or deliberate disregard is required to prove the false claims act – reverse and regular.

Failure to respond to a CID completely could warrant criminal contempt. This is especially important to note, as civil investigate demand sounds much less important than a subpoena. But a CID is, in essence, a subpoena. Immediately, implement a “legal hold” upon receipt of the CID, and don’t forget to avoid producing privileged documents.

After the investigation is complete, if there are violations of the FCA uncovered, you will receive correspondence that states in “all-caps” and bold font:

Rule 408 FOR SETTLEMENT PURPOSES ONLY 

FRE 408 prohibits the use of settlement negotiations as evidence. After reviewing the offer, get with your legal counsel to discuss next steps.

Medicare Providers: Are Your Claims Clean?

The federal regulations mandate that 90% of “clean claims” must be paid to the providers by 30-days. 42 CFR § 447.45. But, what if (the payor) doesn’t pay within 30-days? What if your claims are unclean? The problem is – who determines what is a clean claim? Your payor? Your MAC? If you bill 100 claims and are paid for 50 because 50 claims are denied as not being “clean,” how do you know whether 50 claims were actually unclean? If you disagree with whoever’s determination it is that says your claims aren’t clean, where do you appeal that decision? Can you appeal that determination? The answer is no. In an egregious case, you could litigate and argue that the MAC or whomever is not conducting their job properly.

The Medicare and Medicaid billing, reimbursement, and appeals processes are clear as mud and run contrary to American values and concepts, such as due process and property rights.

CMS codified a rule – “90% of clean claims must be paid to the provider by 30-days,” but never codified an appeal process to dispute decisions. A clean claim is defined as one that can be processed without obtaining additional information from the provider of the service or from a third-party. It includes a claim with errors originating in the State’s claims system. It does not include a claim from the provider who is under investigation for fraud or abuse, or a claim under review for medical necessity.

“Clean” does not mean perfect because the Social Security Act states that claims do not have to be 100% perfect to be “clean.” There is no rule or law that requires claims to be perfect. CMS’ failure to create a definition of clean or an appeal process for the determination of clean, places providers in a very uncomfortable position that their reimbursements are predicated on another entity’s subjective decision as whether the provider billed “clean” claims and no way to refute the allegations or defend themselves from what might be erroneous determinations that the claims were not “clean.”

In CMS Manuel System, Pub. 100-04 Medicare Claims Processing, dated July 20, 2007, CMS uses the phrase “other-than-clean” to describe an unclean claim. CMS also states that “other-than-clean” claims should be notified to the provider within 45 days. As in, you should be told of your uncleanliness within 45-days.

In Southern Rehabilitation Group, PLLC. v. Burwell, 683 Fed. Appx. 354 (6th Cir. 2017), a provider of inpatient rehabilitation health care services brought action against DHHS alleging fraud and other wrongful conduct, such not making timely payments (within 30-days), in processing claims for reimbursement under Medicare. DHHS argued that the unpaid claims were not “clean.” The Court held that the phrase under “clean claims” provision of the Medicare Act referring to treatment that “prevents timely” payment refers to treatment that delays it. The Court allowed DHHS to call claims “not clean,” and the provider had no recourse.

It just seems that so many determinations in Medicare/caid are subjective:

  • “Credible” allegations of fraud. See blog.
  • “Clean” claims
  • Service notes are “compliant.”
  • The patient should not have been designated as “inpatient”
  • 75% “compliant” for three consecutive months. See blog.
  • Managed Care Organizations terminating your contract. See blog.

Many determinations that adversely affect providers have no mechanism to disagree, push back, or appeal.

Medicare Inpatient versus Outpatient Status: A Due Process Right!

On January 25, 2022, the U.S. Court of Appeals for the Second Circuit issued an important opinion in Barrows v. Becerra that will have a significant impact on hospitals, skilled nursing facilities and, potentially, other Medicare providers. The Second Circuit affirmed a ruling from the United States District Court for the District of Connecticut that the U.S. Secretary of Health and Human Services (HHS) violated the due process rights of a certified nationwide class of Medicare patients that were reclassified from “inpatient” to “observation” by a hospital’s utilization review committee (URC) without being provided an administrative review process to challenge that determination.

Although hospitals (and other Medicare providers and suppliers) are not typically considered to be governmental actors, the Second Circuit affirmed the district court’s conclusion that the Centers for Medicare and Medicaid Services (CMS) requirements surrounding hospital URCs made those determinations “state action” and thus subject to due process requirements under the Fifth Amendment of the U.S. Constitution.

The classification from “inpatient” to “observation” can have significant financial repercussions to the Medicare beneficiary. Hospital inpatient services are generally covered under Medicare Part A. Outpatient or observation services are generally covered under Medicare Part B. Medicare beneficiaries pay monthly premiums for Part B coverage and also are subject to copayment obligations under Part B that may be higher than the inpatient deductible under Part A.

The Second Circuit’s opinion has huge ramifications on providers, especially hospitals. This opinion says a hospital stands in the shoes of the government when deciding to charge this person’s hospital stay under Part B. But what if the hospital itself argues that Part A should pay and it disagrees with the patient being deemed outpatient? Well, this ruling gives hospitals a lot more leeway in its finances. A hospital can sue on behalf of its consumer or itself in getting higher or any reimbursements.

The threshold question presented in Barrows was whether CMS’s oversight and control over hospital URC’s reclassification determinations transform those URCs into state action and thus subject to constitutional due process. The Second Circuit affirmed the district court’s decision, which also included a permanent injunction, requiring the HHS Secretary to create some sort of due process if a Medicare beneficiary disagrees with a hospital URC’s reclassification determination.

This decision may also favorably impact skilled nursing facilities. Generally, a Medicare beneficiary must have a three-day inpatient stay at a hospital in order for Medicare to pay for a subsequent stay in a skilled nursing facility. This three-day requirement is currently waived during the COVID-19 public health emergency. Once the three-day-stay requirement returns, this decision may positively impact skilled nursing facilities by discouraging hospitals from reclassifying patients from inpatient to observation.

Although the district court decision was issued in 2020, the Second Circuit had granted a temporary stay to allow the HHS Secretary to appeal. In the Second Circuit’s opinion, the Court affirmed the district court and denied the HHS Secretary’s motion for stay as moot.

At this stage, HHS has not signaled what due process hospital URCs will have to provide a Medicare beneficiary who disagrees with a reclassification determination. There are also open questions about how to handle potential claims for various members of the class. The class includes Medicare beneficiaries who have been hospitalized since January 1, 2009, had their status changed from inpatient to hospital, received a notice from the hospital or Medicare, and either have Part A-coverage only or had Part A and B and were (or still could be) admitted to a skilled nursing facility within 30 days of hospital discharge.

The HHS Secretary has until late April 2022 to file a petition for writ of certiorari in the U.S. Supreme Court. At the time of this publication, HHS has not indicated whether it intends to appeal.

The Medicare Provider Appeals Backlog and LCDs May Not Be As Important as One Would Think!

It’s a miracle! HHS has reduced the Medicare appeals backlog at the Administrative Law Judge (“ALJ”) level[1] by 75 %, which puts the department on track to clear the backlog by the end of the 2022 fiscal year. The department had 426,594 appeals bottlenecked on backlog. An audit from 2016 could get heard by an ALJ in 2021. However, movement has occurred.

According to the latest status report, HHS has 86,063 pending appeals remaining at the Office of Medicare Hearing and Appeals (“OMHA”).

In 2018, a federal Judge ruled in favor of the American Hospital Association (“AHA”) and its hospital Plaintiffs and Ordered HHS to eliminate the backlog of appeals by the end of FY 2022 and provided the department with a number of goals. According to the ruling, HHS had to reduce the backlog by 19 percent by the end of FY 2019, 49 percent by the end of FY 2020, and 75 percent by the end of FY 2021. Originally, the Order scheduled the timeframe for disseminating the backlog much shorter, but CMS claimed impossibility.

On another note, lately, I’ve seen a lot of supposed audit results based on local coverage determinations (“LCDs”) or policy manuals. This is unacceptable. In a January 4, 2022, decision from the NC Court of Appeals, the Court held that when a State agency implements an unpromulgated rule, the rule may not be enforced. Hendrixson v. Div. of Soc. Servs., 2022-NCCOA-10, ¶ 9. The Hendrixson case piggybacks the Supreme Court, which held that LCDs are unenforceable against providers. Azar v. Allina Health Services, 139 S. Ct. 1804, 204 L. Ed. 2d 139 (2019).

In Hendrixson v. Division of Social Services, the Court held that people eligible for Medicare Part B must apply and enroll and that if the applicant fails to enroll, Medicaid pays no portion of the costs for medical services that would have been covered by Medicare Part B, as you know Medicare Part B provides coverage for certain hospital outpatient services, physician services, and services not covered by Part A. See Bruton, 134 N.C. App. at 42, 516 S.E.2d at 635; 42 U.S.C. § 1395k (2019); 42 C.F.R. § 407.2 (2020). Enrollment in Medicare Part B is generally not automatic, see 42 C.F.R. §§ 407.4-407.40 (2020), and requires the patient to pay insurance premiums to enroll, after which the federal government pays most of the reasonable costs, with patients paying the remaining cost and an annual deductible. See Bruton, 134 N.C. App. at 42, 516 S.E.2d at 635; 42 U.S.C. §§ 1395l, 1395r-1395s (2019); 42 C.F.R. § 407.2 (2020). “Together, the part B premiums, deductibles and coinsurance are generally referred to as ‘Part B cost-sharing.’” Bruton, 134 N.C. App. at 42, 516 S.E.2d at 635. At your hospital or health care entity, do you have someone dedicated to properly enrolling consumers into Medicare Part B? If not, you may want to consider as a financial investment. Additionally, while you do not want to ignore the LCDs, the LCDs or Manuals cannot be a basis for any alleged recoupment or other sanction. As a general canon, any unpromulgated rule cannot be the basis of any penalty.


[1] The ALJ level is the third level in Medicare provider audits, but the first time that providers are allowed to present evidence to an independent tribunal.

Managed Care Ruins Medicaid and Terminates Providers at Whim!

If you receive a letter from CMS or your State Department terminating your Medicare or Medicaid contract, would that affect you financially? I ask this rhetorical question because providers’ rights to a Medicare or Medicaid contract or to reimbursements for services rendered is a split in the Circuit Courts. Thankfully, I reside in the 4th Circuit, which has unambiguously held that providers and recipients have a property right in reimbursements for services rendered, a Medicare/caid contract and the right to the freedom of choice of provider. If you live in the 8th Circuit Court of Appeals, I am sorry. You have no rights.

Usually when there is split decision among the Circuit Courts, the Supreme Court weighs in. But, it has not. In fact, it declined to opine. Timing is everything. A 4th Circuit court of Decision giving providers property rights requested the Supreme Court to weigh in and finally end this rift amongst the Circuits. But, sadly, Justice Ginsburg died on September 18, 2020. The Supreme Court declined to review the Fourth Circuit decision on October 13, 2020.  Justice Barrett was confirmed by the Senate on October 26, 2020 and was sworn in on October 27, 2020. So, the certiorari was denied – I assume – due to the vacant seat at the time.

In 40 States, managed care manages Medicaid. The contracts they write are Draconian, saying that either party may terminate at will for no cause but for convenience. Termination at will is all fine and good in the private sector. However, Medicare and Medicaid are highly regulated, and when tax dollars and access to care are at issue, property rights are created.

In NC State Court, against the judgment of the 4th Circuit, a November 5, 2021, unpublished case determined that providers have no property rights to a Medicaid contract and an MCO can terminate at whim. Family Innovations v. Cardinal Innovations Healthcare Solutions, No. COA20-681 (June 1, 2021). Unpublished decisions are supposed to carry no weight. Unpublished decisions are not supposed to be controlling. Citation is disfavored.

Yet, in a strange turn of events, our State administrative courts have rendered, in the last week and in violation of 4th Circuit and administrative case law, that the termination-at-will clause in the MCO contract that a provider is forced to sign stands and is enforceable. These were new Judges and obviously were not well-versed in Medicaid law. Both came from employment law backgrounds, which is completely different than the health care world. But their rash and uneducated decisions bankrupt companies and shut down access to care for medically necessary behavioral health care services.

The upshot? If you have managed care companies in charge of your Medicaid or Medicare contracts, review your contracts now. Is there a termination-at-will clause? Because if there is, you too could lose your contract at any time. Depending on where you reside, you may or may not have property rights in the Medicare Medicaid contract. This is an issue that the Supreme Court must decide. Too many providers are getting erroneously and discriminatorily terminated for no reason and given no due process.

We must bring litigation to thwart the Courts that uphold termination-at-will clauses. Especially, in the era of COVID, we need our health care providers. We certainly do not need the MCOs, which kill access to care.

Medicare Appeals: Time Is of the Essence!

Timing is everything. Missing a deadline germane to any type of Medicare or Medicaid audit is deadly. Miss an appeal deadline by one, single day, and you lose your right to appeal an overpayment.

 If anyone has watched Schitt’s Creek, then you know that when Johnny and Moira Rose missed their deadline to file for and pay taxes, they lost their mansion, their money, and way of life. The same catastrophic loss can occur if a provider misses an appeal deadline. Then that provider will be up Schitt’s Creek.

Importantly, when it comes to Medicare appeals, your appeal is due 60 days after the reconsideration review decision. 42 CFR § 405.1014 – Request for an ALJ hearing or a review of a QIC dismissal. A third-level, Medicare provider appeal is considered “filed” upon receipt of the complete appeal at the Office of Medicare Hearings and Appeals, instead of the normal standard acceptance that an appeal is filed upon the mailing stamped date. As in, once you mail your appeal, it will be retroactively filed per the date of mailing. Not true for the third-level, Medicare provider appeal. It is considered filed the date of receipt.

Also, the regulatory clock starts ticking 5 days after the date the of the reconsideration review decision, because, the thought is that the U.S. Post Office will not take more than 5 days to deliver correspondence. Well, that assumption nowadays is inaccurate. The Post Office is a mess, and that’s an understatement. My friend, Dr. Ronald Hirsh told me that his overnighted packages have been received weeks later. More times than not, mail is received weeks after it was mailed, which makes the date of delivery imperative. Yet this regulation forces you to rely on the U.S. Post Office; it makes no logical sense.

We actually had a case in which the ALJ dismissed our appeal because the Post Office delivered the appeal on the 61st day after the reconsideration review decision, including the 5 days window. Literally, the 61st day. The reason that the appeal was received on the 61st day is because the 60th day fell on a holiday, a weekend, or a closure due to COVID – I cannot recall – but OMHA was closed. The mail delivery person had to return the next day to deliver the appeal. Yet, our appeal was dismissed based on the US Post Office! We filed a Motion to Reconsider, but the ALJ denied it. Our only chance at presenting to the ALJ was squashed – due to the Post Office.

We appealed the ALJ’s denial to the Medicare Appeals Council with hope of reasonableness. We have no decision yet. It certainly makes me want to say: Eww, David!

Ewww, David!

Medicare Provider Appeals: “Get Thee to an ALJ!”

Get thee to a nunnery!” screamed Hamlet to Ophelia in frustration of his mother marrying Claudius so quickly after his father’s death. Similarly any provider who has undergone a Medicare appeal understands the frustration of getting the appeal to the administrative law judge level (the 3rd level). It takes years to do so, and it is the imperative step instead of the lower level rubber stamps. “Get thee to an ALJ!”

Per regulation, once you appeal an alleged Medicare overpayment, no recoupment of the disputed funds occurs until after you receive the second level review, which is usually the QIC upholding the overpayment. It is no secret that the Medicare provider appeals’ level one and two are basically an automatic approval process of the decision to recoup. “Something is rotten in the state of Denmark.” Hence, the importance of the ALJ level.

There are 5 levels of Medicare appeals available to providers:

  • Redetermination
  • Reconsideration
  • Administrative Law Judge (ALJ)
  • Departmental Appeals Board (DAB) Review
  • Federal Court (Judicial) Review

The third level is the level in which you present your case to an ALJ, who is an impartial independent tribunal. Unfortunately, right now, it takes about five years between levels two and three, although with CMS hiring 70 new ALJs, the Office of Medicare Hearings and Appeals (OMHA) is optimistic that the backlog will quickly dissipate. Last week, I attended an ALJ hearing for a client based on an audit conducted in 2016. Five years later, we finally presented to the ALJ. When the ALJ was presented with our evidence which clearly demonstrated that the provider should not pay anything, he actually said, “I’m shocked this issue got this far.” As in, this should have been reversed before this level. “O what a noble mind is here o’erthrown!”

In many cases, a premature recoupment of funds in dispute will financially destroy the health care provider, which should not be the purpose of any overpayment nor the consequence of any fraud, waste, and abuse program. We are talking about documentation nit-picking. Not fraud. Such as services notes signed late, according to best practices. Or quibbles about medical necessity or the definition of in patient and the two-midnight rule.

You have all probably read my blogs about the Family Rehab case that came out in TX in 2019. A Court found that Family Rehab, a health care facility, which faced a $7 million alleged overpayment required an injunction. The Judge Ordered that CMS be enjoined from prematurely recouping Medicare reimbursements from Family Rehab. Now, be mindful, the Judge did not enjoin CMS the first time Family Rehab requested an injunction; Superior Court initially dismissed the case for lack of jurisdiction based on failure to exhaust its administrative remedies. But instead of giving up, which is what most providers would do when faced with a dismissed injunction request due to emotional turmoil and finances. “To be, or not to be: that is the question:” Instead, Family Rehab appealed the dismissal to the Court of Appeals and won. The 5th Circuit held that Superior Court does have jurisdiction to hear a collateral challenge on both procedural due process grounds as well as an ultra vires action. On remand, Family Rehab successfully obtained a permanent injunction.

The clinical issues supposedly in support of the overpayment are silly. In Family Rehab’s case, the ZPIC claims homebound criteria was not met when it is clearly met by a reasonable review of the documents.

Homebound is defined as:

Criteria One:

The patient must either:

  • Because of illness or injury, need the aid of supportive devices such as crutches, canes, wheelchairs, and walkers; the use of special transportation; or the assistance of another person in order to leave their place of residence

OR

  • Have a condition such that leaving his or her home is medically contraindicated.

If the patient meets one of the Criteria One conditions, then the patient must ALSO meet two additional requirements in Criteria Two below:

Criteria Two:

  • There must exist a normal inability to leave home;

AND

  • Leaving home must require a considerable and taxing effort.

In one of the claims that the ZPIC found no homebound status, the consumer was legally blind and in a wheelchair! The injunction hinged on the Court’s finding that because the ALJ stage is critical in decreasing the risk of erroneous deprivation, an injunction was necessary. I look forward to the ALJ hearing. “The rest is silence.”