Category Archives: Secretary of Health and Human Services

“Ought Implies Can” – Court Reverses Decision Forcing HHS to Eliminate Medicare Appeal Backlog

But all is not lost… it all lies in the possibility…

A few weeks ago I blogged about Health and Human Services (HHS) possibly being held in contempt of court for violating an Order handed down on Dec. 5, 2016, by U.S. District Judge James Boasberg. See blog.

The District Court Judge granted a motion for summary judgment in favor of the American Hospital Association in AHA v. Burwell. He ordered HHS to incrementally reduce the backlog of 657,955 appeals pending before the agency’s Office of Medicare Hearings and Appeals over the next four years, reducing the backlog by 30% by the end of 2017; 60% by the end of 2018; 90% by the end of 2019; and to completely eliminate the backlog by Dec. 31, 2020.

This was a huge win for AHA – and Medicare providers across the country. Currently, when a provider appeals an adverse decision regarding Medicare, it costs an inordinate amount of attorneys’ fees, and the provider will not receive legal relief for upwards of 6 – 10 years, which can cause financial hardship, especially if the adverse action is in place during the appeal process. Yet the administrative appeal process was designed (poorly) to conclude within 1 year.

With the first deadline (the end of 2017) fast approaching and HHS publicly announcing that the reduction of 30% by the end of 2017 is impossible, questions were posed – how could the District Court hold HHS, a federal agency, in contempt?

We got the answer.

On August 11, 2017, the U.S. Appeals Court for the District of Columbia overturned the District Court; thereby lifting the requirement to reduce the Medicare appeal backlog.

deflatedWiping tear from face.

The first paragraph of the Ruling, indicates the Court’s philosophic reasoning, starting with a quote from Immanuel Kant (not to be confused with Knicole Emanuel), CRITIQUE OF PURE REASON 548 (Norman Kemp Smith trans., Macmillan 1953) (1781) (“The action to which the ‘ought’ applies must indeed be possible under natural conditions.”)

First paragraph of the decision:

“”Ought implies can.” That is, in order for law – man-made or otherwise – to command the performance of an act, that act must be possible to perform. This lofty philosophical maxim, ordinarily relevant only to bright-eyed college freshmen, sums up our reasoning in this case.”

The Appeals Court determined that the District Court commanded the Secretary to perform an act – clear the backlog by certain deadlines – without evaluating whether performance was possible.

The Medicare backlog skyrocketed in 2011 due to the federally-required Medicare Recovery Audit Program (RAC). With the implementation of the RAC program, the number of appeals filed ballooned from 59,600 in fiscal year 2011 to more than 384,000 in fiscal year 2013. These appeals bottlenecked to the third level of appeal, which is before an administrative law judge (ALJ). As of June 2, 2017, there was a backlog of 607,402 appeals awaiting review at this level. On its current course, the backlog is projected to grow to 950,520 by the end of fiscal year 2021.

There is a way for a provider to “skip” the ALJ level and “escalate” the claim, but it comes at a cost. Several procedural rights must be forfeited.

It is important to note that the appellate decision does not state that the District Court does not have the authority to Order HHS to eliminate the appeals backlog.

It only holds that, because HHS claims that compliance is impossible, the District Court must rule on whether compliance is possible before mandating the compliance. In other words, the Appeals Court wants the lower court to make a fact-finding decision as to whether HHS is able to eliminate the backlog before ordering it to do so. The Appeals Court is instructing the lower court to put the horse in front of the cart.

The Appeals Court explicitly states that it is suspect that the Secretary of HHS has done all things possible to decrease the backlog. (“We also share the District Court’s skepticism of the Secretary’s assertion that he has done all he can to reduce RAC-related appeals.”) So do not take the Appeals Court’s reversal as a sign that HHS will win the war.

I only hope that AHA presents every possible legal argument once the case is remanded to District Court. It is imperative that AHA’s attorneys think of every possible legal misstep in this remand in order to win. Not winning could potentially create bad law, basically, asserting that the Secretary has no duty to fix this appeals backlog. Obviously, the Secretary is exactly the person who should fix the backlog in his own agency. To hold otherwise, would thwart the very reason we have a Secretary of HHS. Through its rhetoric, the Appeals Court made it clear that it, too, has severe reservations about HHS’ claim of impossibility. However, without question, AHA’s suggestion to the District Court that a timeframe be implemented to reduce the backlog is not the answer. AHA needs to brainstorm and come up with several detailed proposals. For example, does the court need to include a requirement that the Secretary devote funds to hire additional ALJs? Or mandate that the ALJs work a half day on Saturday? Or order that the appeal process be revised to make the process more efficient? Clearly, the mere demand that HHS eliminate the backlog within a certain timeframe was too vague.

From here, the case will be remanded back to the District Court with instructions to the Judge to determine whether the elimination of the Medicare appeal backlog is possible. So, for now, HHS is safe from being held in contempt. But the Secretary should take heed from the original ruling and begin taking steps in fixing this mess. It is highly likely that HHS will be facing similar deadlines again – once the District Court determines it is possible.

Class Action Lawsuit Alleges Right to Inpatient Hospital Stays: Hospitals Are Damned If They Do…and Don’t!

Hospitals – “Lend me your ears; I come to warn you, not to praise RACs. The evil that RACs do lives after them; The good is oft interred with their appeals; So let it be with lawsuits.” – Julius Caesar, with modifications by me.

A class action lawsuit is pending against U.S. Health and Human Services (HHS) alleging that the Center for Medicare and Medicaid Services (CMS) encourages (or bullies) hospitals to place patients in observation status (covered by Medicare Part B), rather than admitting them as patients (covered by Medicare Part A). The Complaint alleges that the treatments while in observation status are consistent with the treatments if the patients were admitted as inpatients; however, Medicare Part B reimbursements are lower, forcing the patient to pay more out-of-pocket expenses without recourse.

The United States District Court for the District of Connecticut refused to dismiss the class action case on February 8, 2017, giving the legal arguments within the Complaint some legal standing, at least, holding that the material facts alleged warrant investigation.

The issue of admitting patients versus keeping them in observation has been a hot topic for hospitals for years. If you recall, Recovery Audit Contractors (RACs) specifically target patient admissions. See blog and blog. RAC audits of hospital short-stays is now one of the most RAC-reviewed issues. In fiscal year 2014, RACs “recouped” from hospitals $1.2 billion in allegedly improper inpatient claims. RACs do not, however, review outpatient claims to determine whether they should have been paid as inpatient.

On May 4, 2016, CMS paused its reviews of inpatient stays to determine the appropriateness of Medicare Part A payment. On September 12, 2016, CMS resumed them, but with more stringent rules on the auditors’ part. For example, auditors cannot audit claims more than the six-month look-back period from the date of admission.

Prior to September 2016,  hospitals would often have no recourse when a claim is denied because the timely filing limits will have passed. The exception was if the hospital joined the Medicare Part A/Part B rebilling demonstration project. But to join the program, hospitals would forfeit their right to appeal – leaving them with no option but to re-file the claim as an outpatient claim.

With increased scrutiny, including RAC audits, on hospital inpatient stays, the class action lawsuit, Alexander et al. v. Cochran, alleges that HHS pressures hospitals to place patients in observation rather than admitting them. The decision states that “Identical services provided to patients on observation status are covered under Medicare Part B, instead of Part A, and are therefore reimbursed at a lower rate. Allegedly, the plaintiffs lost thousands of dollars in coverage—of both hospital services and subsequent skilled nursing care—as a result of being placed on observation status during their hospital stays.” In other words, the decision to place on observation status rather than admit as an inpatient has significant financial consequences for the patient. But that decision does not affect what treatment or medical services the hospital can provide.

While official Medicare policy allows the physicians to determine the inpatient v. observation status, RAC audits come behind and question that discretion. The Medicare Policy states that “the decision to admit a patient is a complex medical judgment.” Ch. 1  § 10. By contrast, CMS considers the determination as to whether services are properly billed and paid as inpatient or outpatient to be a regulatory matter. In an effort to avoid claim denials and recoupments, plaintiffs allege that hospitals automatically place the patients in observation and rely on computer algorithms or “commercial screening tools.”

In a deposition, a RAC official admitted that if the claim being reviewed meets the “commercial screening tool” requirements, then the RAC would find the inpatient status is appropriate, as long as there is a technically valid order. No wonder hospitals are relying on these commercial screening tools more and more! It is only logical and self-preserving!

This case was originally filed in 2011, and the Court of Appeals overturned the district court’s dismissal and remanded it back to the district court for consideration of the due process claims. In this case, the Court of Appeals held that the plaintiffs could establish a protected property interest if they proved their allegation “that the Secretary—acting through CMS—has effectively established fixed and objective criteria for when to admit Medicare beneficiaries as ‘inpatients,’ and that, notwithstanding the Medicare Policy Manual’s guidance, hospitals apply these criteria when making admissions decisions, rather than relying on the judgment of their treating physicians.”

HHS argues that that the undisputed fact that a physician makes the initial patient status determination on the basis of clinical judgment is enough to demonstrate that there is no due process property interest at stake.

The court disagreed and found too many material facts in dispute to dismiss the case.

Going forward:

Significant discovery will be explored as to the extent to which hospitals rely on commercial screening tools. Also whether the commercial screening tools are applied equally to private insureds versus Medicare patients.

Significant discovery will be explored on whether the hospital’s physicians challenge changing a patient from inpatient to observation.

Significant discovery will be explored as to the extent that CMS policy influences hospital decision-making.

Hospitals need to follow this case closely. If, in fact, RAC audits and CMS policy is influencing hospitals to issue patients as observation status instead of inpatient, expect changes to come – regardless the outcome of the case.

As for inpatient hospital stays, could this lawsuit give Medicare patients the right to appeal a hospital’s decision to place the patient in observation status? A possible, future scenario is a physician places a patient in observation. The patient appeals and gets admitted. Then hospital’s claim is denied because the RAC determines that the patient should have been in observation, not inpatient. Will the hospitals be damned if they do, damned if they don’t?

damned

In the meantime:

Hospitals and physicians at hospitals: Review your policy regarding determining inpatient versus observation status. Review specific patient files that were admitted as inpatient. Was a commercial screening tool used? Is there adequate documentation that the physician made an independent decision to admit the patient? Hold educational seminars for your physicians. Educate! And have an attorney on retainer – this issue will be litigated.

NC DHHS’ New Secretary – Yay or Nay?

Our newly appointed DHHS Secretary comes with a fancy and distinguished curriculum vitae. Dr. Mandy Cohen, DHHS’ newly appointed Secretary by Gov. Roy Cooper, is trained as an internal medicine physician. She is 38 (younger than I am) and has no known ties to North Carolina. She grew up in New York; her mother was a nurse practitioner. She is also a sharp contrast from our former, appointed, DHHS Secretary Aldona Wos. See blog.

cohen

Prior to the appointment as our DHHS Secretary, Dr. Cohen was the Chief Operating Officer and Chief of Staff at the Centers for Medicare and Medicaid Services (CMS). Prior to acting as the COO of CMS, she was Principal Deputy Director of the Center for Consumer Information and Insurance Oversight (CCIIO) at CMS where she oversaw the Health Insurance Marketplace and private insurance market regulation. Prior to her work at CCIIO, she served as a Senior Advisor to the Administrator coordinating Affordable Care Act implementation activities.

Did she ever practice medicine?

Prior to acting as Senior Advisor to the Administrator, Dr. Cohen was the Director of Stakeholder Engagement for the CMS Innovation Center, where she investigated new payment and care delivery models.

Dr. Cohen received her Bachelor’s degree in policy analysis and management from Cornell University, 2000. She obtained her Master’s degree in health administration from Harvard University School of Public Health, 2004, and her Medical degree from Yale University School of Medicine, 2005.

She started as a resident physician at Massachusetts General Hospital from 2005 through 2008, then was deputy director for comprehensive women’s health services at the Department of Veterans Affairs from July 2008 through July 2009. From 2009 through 2011, she was executive director of the Doctors for America, a group that promoted the idea that any federal health reform proposal ought to include a government-run “public option” health insurance program for the uninsured.

Again, I was perplexed. Did she ever practice medicine? Does she even have a current medical license?

This is what I found:

physicianprofile

It appears that Dr. Cohen was issued a medical license in 2007, but allowed it to expire in 2012 – most likely, because she was no longer providing medical services and was climbing the regulatory and political ladder.

From what I could find, Dr. Cohen practiced medicine (with a fully-certified license) from June 20, 2007, through July 2009 (assuming that she practiced medicine while acting as the deputy director for comprehensive women’s health services at the Department of Veterans Affairs).

Let me be crystal clear: It is not my contention that Dr. Cohen is not qualified to act as our Secretary to DHHS because she seemingly only practiced medicine (fully-licensed) for two years. Her political and policy experience is impressive. I am only saying that, to the extent that Dr. Cohen is being touted as a perfect fit for our new Secretary because of her medical experience, let’s not make much ado of her practicing medicine for two years.

That said, regardless Dr. Cohen’s practical medical experience, anyone who has been the COO of CMS must have intricate knowledge of Medicare and Medicaid and the essential understanding of the relationship between NC DHHS and the federal government. In this regard, Cooper hit a homerun with this appointment.

Herein lies the conundrum with Dr. Cohen’s appointment as DHHS Secretary:

Is there a conflict of interest?

During Cooper’s first week in office, our new Governor sought permission, unilaterally, from the federal government to expand Medicaid as outlined in the Affordable Care Act. This was on January 6, 2017.

To which agency does Gov. Cooper’s request to expand Medicaid go? Answer: CMS. Who was the COO of CMS on January 6, 2017? Answer: Cohen. When did Cohen resign from CMS? January 12, 2017.

On January 14, 2017, a federal judge stayed any action to expand Medicaid pending a determination of Cooper’s legal authority to do so. But Gov. Cooper had already announced his appointment of Dr. Cohen as Secretary of DHHS, who is and has been a strong proponent of the ACA. You can read one of Dr. Cohen’s statements on the ACA here.

In fact, regardless your political stance on Medicaid expansion, Gov. Cooper’s unilateral request to expand Medicaid without the General Assembly is a violation of NC S.L. 2013-5, which states:

SECTION 3. The State will not expand the State’s Medicaid eligibility under the Medicaid expansion provided in the Affordable Care Act, P.L. 111-148, as amended, for which the enforcement was ruled unconstitutional by the U.S. Supreme Court in National Federation of Independent Business, et al. v. Sebelius, Secretary of Health and Human Services, et al., 132 S. Ct. 2566 (2012). No department, agency, or institution of this State shall attempt to expand the Medicaid eligibility standards provided in S.L. 2011-145, as amended, or elsewhere in State law, unless directed to do so by the General Assembly.

Obviously, if Gov. Cooper’s tactic were to somehow circumvent S.L. 2013-5 and reach CMS before January 20, 2017, when the Trump administration took over, the federal judge blockaded that from happening with its stay on  January 14, 2017.

But is it a bit sticky that Gov. Cooper appointed the COO of CMS, while she was still COO of CMS, to act as our Secretary of DHHS, and requested CMS for Medicaid expansion (in violation of NC law) while Cohen was acting COO?

You tell me.

I did find an uplifting quotation from Dr. Cohen from a 2009 interview with a National Journal reporter:

“There’s a lot of uncompensated work going on, so there has to be a component that goes beyond just fee-for service… But you don’t want a situation where doctors have to be the one to take on all the risk of taking care of a patient. Asking someone to take on financial risk in a small practice is very concerning.” -Dr. Mandy Cohen

New Revisions to Stark Law: Beware the “Per-Click Lease” – Maybe?

Scenario: You have an arrangement with your local hospital. You are a urologist and your practice owns a laser machine. You lease your laser machine to Hospital A, and your lease allows you to receive additional, but fair market value, money depending on how often your machine is used. Legal?

A new Final Ruling from the Centers for Medicare and Medicaid Services (CMS) provides murky guidance.

CMS finalized the 2017 Medicare Physician Fee Schedule (PFS) rule, which took effect on January 1, 2017. There have been few major revisions to the Stark Law since 2008…until now. The Stark Law is named for United States Congressman Pete Stark (D-CA), who sponsored the initial bill in 1988. Politicians love to name bills after themselves!

Absent an exception, the Stark Law prohibits a physician from referring Medicare patients for certain designated health services (“DHS”), for which payment may be made under Medicare, to any “entity” with which the physician (or an immediate family member) has a “financial relationship.” Conversely, the statute prohibits the DHS-furnishing entity from filing claims with Medicare for those referred services.

Despite the general prohibition on potentially self-interested referrals, the Stark Law permits Medicare referrals by physicians to entities in which they have a financial interest in certain limited circumstances. But these circumstances are limited and must be followed precisely and without deviation.

These exceptions are created by legally excluding some forms of compensation agreements and ownership interests from the definition of “financial relationship,” thus allowing both the relationships and the referrals. See 42 U.S.C. § 1395nn(b)-(e).

One of such exceptions to the Stark Law is the equipment lease exception.

This equipment lease exception to Stark law allows a financial relationship between physicians and hospitals for the lease of equipment, only if the lease (1) is in writing; (2) assigns the use of the equipment exclusively to the hospital; (3) lasts for a term of at least one year; (4) sets rental charges in advance that are consistent with fair market value and “not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties”; (5) satisfies the standard of commercial reasonableness even absent any referrals; and (6) meets “such other requirements as the Secretary may impose by regulation as needed to protect against program or patient abuse.”

For example, like the scenario above, a urology group owns and leases a laser machine to Hospital A. As long as the lease meets the criteria listed above, the urologists may refer Medicare patients to Hospital A to their hearts’ content – even though the urologists benefit financially from their own referrals.

However, what if the monetary incentive is tied to the amount the machine is actually used – or the “per-click lease?”

In a court case decided in January 2015, Council for Urological Interests v. Burwell, a D.C. circuit court decided that CMS’ ban on per-click leases was unreasonable.

In CMS’ Final Ruling, effective January 1, 2017, CMS again re-issued the per-click lease ban. But CMS’ revised ban appears to be more parochial in scope. CMS states that it “did not propose and [is] not finalizing an absolute prohibition on rental charges based on units of service furnished” and that “[i]n general, per-unit of service rental charges for the rental of office space or equipment are permissible.” As CMS had previously stated, the per-click ban applies only “to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.”

Considering how unclear the Final Rule is – We are banning per-click leases, but not absolutely – expect lawsuits to clarify. In the meantime, re-visit your equipment leases. Have your attorney review for Stark compliance – because for the first time since 2008, major amendments to Stark Law became effective January 1, 2017.

Do the Anti-Kickback and Stark Laws Apply to Private Payors?

Good question.

Anti-Kickback statutes (AKS) and Stark law are extremely important issues in health care. Violations of these laws yield harsh penalties. Yet, many healthcare professionals have little to no knowledge on the details of these two legal beasts.

The most common question I get regarding AKS and Stark is: Do AKS and Stark apply to private payers? Health care professionals believe, if I don’t accept Medicare or Medicaid, then I don’t need to worry about AKS and Stark. Are they correct??

The general and overly broad response is that the Stark Law, 42 USC § 1395nn, only applies to Medicare and Medicaid. The AKS, 42 USC § 1320a-7b(b)),applies to any federal healthcare program.

Is there a difference between AKS and Stark?

Answer: Yes. As discussed above, the first difference is that AKS applies to all federal healthcare programs. This stark difference (pun intended) makes the simple decision to not accept Medicare and Medicaid, thus allowing you to never worry about AKS, infinitely more difficult.

Let’s take a step back… What are AKS and Stark laws and what do these laws prohibit? When you Google AKS and Stark, a bunch of legal blogs pop up and attempt to explain, in legalese, what two, extremely esoteric laws purport to say, using words like “renumeration,” “knowing and willful,” and “federal healthcare program.” You need a law license to decipher the deciphering of AKS and Stark. The truth is – it ain’t rocket science.

The AKS is a criminal law; if you violate the AKS, you can be prosecuted as a criminal. The criminal offense is getting something of value for referrals. You cannot refer patients to other health care professionals in exchange for money, reduced rent, use of laboratory equipment, referrals to you, health services for your mother, marketing, weekly meals at Ruth’s Chris, weekly meals at McDonalds, oil changes, discounted theater tickets, Uber rides, Costco coupons, cooking lessons, or…anything of value, regardless the value. 

Safe harbors (exceptions to AKS) exist. But those exceptions better fit squarely into the definition of the exceptions. Because there are no exceptions beyond the enumerated exceptions.

AKS is much more broad in scope than Stark. Other than Medicare and Medicaid, AKS applies to any health care plan that utilizes any amount of federal funds. For example, AKS applies to Veterans Health Care, State Children’s Health Programs (CHIP), Federal Employees Health Benefit Program, and many other programs with federal funding. Even if you opt to not accept Medicare and Medicaid, you may still be liable under AKS.

Stark law, on the other hand, is more narrow and only applies to Medicare and Medicaid. I find the following “cheat sheet” created by a subdivision of the Office of Inspector General to be helpful in understanding AKS and Stark and the differences between the two:

One other important aspect of Stark is that is considered “strict liability,” whereas AKS requires a proving of a “knowing and willful” action.

Feel free to print off the above chart for your reference. However, see that little asterisk at the bottom of the chart? It applies here as well.

New Federal Legislation Proposed to Increase Due Process for Health Care Providers!

Every once in a blue moon, I am actually happy with the actions of our government. One of these rare occasions occurred on March 17, 2016. Happy St. Patty’s Day!

On March 17, 2016, Senior Senator John Thune from South Dakota introduced S.2736: A bill to require consideration of the impact on beneficiary access to care and to enhance due process protections in procedures for suspending payments to Medicaid providers.

How many times have I blogged about the nonexistence of due process for Medicaid providers??? I cannot even count. (Well,I probably could count, but it take quite some time). My readers know that I have been complaining for years that the federal regulations consider Medicaid provider guilty until proven innocent. See blog. And blog.

Well, finally, someone in Congress has taken notice.What is really cool is that my team at my law firm Gordon & Rees was asked to provide some input for this bill…pretty cool! Although I have to say, everything that we proposed is not included in the proposed bill. Apparently, some of our suggestions were too “pro provider” and “didn’t stand a chance to be passed.” Who would have thought? Baby steps, I was informed.

The bill, if enacted, would require the Secretary of Health and Human Services (HHS) to revise the Code of Federal Regulations, specifically the Title 42 of the CFR.

Currently, 42 CFR 455.23 reads: “the State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.” (emphasis added). Rarely has a state agency found “good cause” to not suspend payments. In fact, quite the opposite. I have seen state agencies use this regulation harshly and with intent to put providers out of business.

S.2736 would revise the above-mentioned language and require that a state agency take certain steps to ensure due process for the provider prior to implementing a suspension in payments.

Prior to implementing a payment suspension, this proposed bill would require the state agency to:

  • Consult with the Medicaid fraud unit for the state and receive written confirmation of such a consultation; and
  • Certify that the agency considered whether beneficiary access would be jeopardized or whether good cause exists, in whole or in part (according to the new, proposed manner of determining good cause)

We all know that the above bullet points supply more protection than we have now.

Furthermore, there are protections on the back end.

After a suspension is implemented, at the beginning of each fiscal quarter, the state Medicaid agency must:

  • certify to the Secretary that it has considered whether the suspension of payments should be terminated or modified due to good cause (as modified by S.2736); and
  • if no good cause is found, furnish to the provider the reasons for such determination.

S.2736 allow requires the agency to disclose the specific allegations of fraud that is being investigated (after a reasonable amount of time) and to evaluate every 180 days whether good cause exists to lift the suspension. Regardless, good cause not to continue the suspension will be deemed to exist after 18 months (with some other qualifying details).

According to a government track website, this bill has a 8% chance of getting past committee. And a 3% chance of being enacted.

The stats on all bills’ “pass-ability,” is that only 15% of bills made it past committee and only about 3% were enacted in 2013–2015.

So call your Congressman or woman! Support S.2736! It’s not perfect, but it’s better!!!

Medicare Appeal Backlog: Tough Tooties!…Unless…[Think Outside the Box!]

When you are accused of a $12 million dollar overpayment by Medicare, obviously, you appeal it.But do you expect that appeal to take ten years or longer? Are such long, wait periods allowed by law? That is what Cumberland Community Hospital System, Inc. (Cape Fear) discovered in a 4th Circuit Court of Appeals Decision, on March 7, 2016, denying a Writ of Mandamus from the Court and refusing to order the Secretary of Health and Human Services (HHS) Burwell to immediately adjudicate Cape Fear’s Medicare appeals to be heard within the Congressional requirement that appeals be heard and decided by Administrative Law Judges (ALJs) within 90 days.

According to the Center for Medicare and Medicaid Services‘ (CMS) website, an “ALJ will generally issue a decision within 90 days of receipt of the hearing request. Again, according to CMS’ website, this time frame may be extended for a variety of reasons including, but not limited to:

  • The case being escalated from the reconsideration level
  • The submission of additional evidence not included with the hearing request
  • The request for an in-person hearing
  • The appellant’s failure to send a notice of the hearing request to other parties
  • The initiation of discovery if CMS is a party.”

In Cape Fear’s case, the Secretary admitted that the Medicare appeal backlog equates to more than 800,000 claims and would, likely, take over 10 years to adjudicate all the claims. Even the 4th Circuit Court, which, ultimately, dismissed Cape Fear’s complaint, agrees with Cape Fear and calls the Medicare appeal backlog “incontrovertibly grotesque.”

Generally, the rule is that if the ALJ does not render a decision after 180 days of the filing of the case, then the provider has the right to escalate the case to the Medicare Appeals Council, which is the 4th step of a Medicare appeal. See blog for more details on the appeal process.

Care appeals

What about after 3,650 days? Get a big pie in the face?

The United States Code is even less vague than CMS’ website. Without question 42 U.S.C. states that for a:

“(1)Hearing by administrative law judge; (A)In general

Except as provided in subparagraph (B), an administrative law judge shall conduct and conclude a hearing on a decision of a qualified independent contractor under subsection (c) of this section and render a decision on such hearing by not later than the end of the 90-day period beginning on the date a request for hearing has been timely filed.”

(emphasis added). And, BTW, subsection (B) is irrelevant here. It contemplates when a party moves for or stipulates to an extension past the 90-day period.

So why did Cape Fear lose? How could the hospital lose when federal administrative code specifically spells out mandatory 90-day limit for a decision by an ALJ? Ever heard of a statute with no teeth? [i.e., HIPAA].

No one will be surprised to read that I have my opinions. First, a writ of mandamus was not the legal weapon to wield. It is an antiquated legal theory that rarely makes itself useful in modern law. I remember the one and only time I filed a writ of mandamus in state court in an attempt to hold a State Agency liable for willfully violating a Court’s Order. I appeared before the judge, who asked me, “Do you know how long I have been on this bench?” To which I responded, “Yes, Your Honor, you have been on the bench for X number of years.” He said, “Do you know how many times I have granted a writ of mandamus?” I said, “No, Your Honor.” “Zero,” he said, “Zero.” The point is that writs of mandamus are rare. A party must prove to the court that he/she has a clear and indisputable right to what is being asked of the court.

Secondly, in my mind, Cape Fear made a disastrous mistake in arguing that it has a clear right for its Medicare appeals to be adjudicated immediately. Think about it…there are 800,000+ Medicare appeals pending before the ALJs. What judge would ever order the administrative court to immediately drop all other 799,250 pended claims (Cape Fear had 750 claims pending) and to adjudicate only Cape Fear’s claims? It is the classic slippery slope…if you do this for Cape Fear, then you need to order the same for the rest of the pended claims.

In this instance, it appears that Cape Fear requested too drastic a measure for a federal judge to order. The claims were doomed from the beginning.

However, I cannot fault Cape Fear for trying since the code is crystal clear in requiring a 90-day turnaround time. The question becomes…what is the proper remedy for a gross disregard, even if unwillful, of the 90-day turnaround period?

This would have taken thinking outside the box.

Medicare providers have some rights. I discuss those rights frequently on this blog. But the population that the courts inevitably want to insulate from “David and Goliath situations” are the recipients. Unlike the perceived, “big, strong, and well-attorneyed” hospital, recipients often find themselves lacking legal representation to defend their statutorily-given right to choose their provider and exercise their right to access to care.

Had Cape Fear approached the same problem from a different perspective and argued violations of law on behalf of the beneficiaries of Cape Fear’s quality health care services, a different result may have occurred.

Another way Cape Fear could have approached the same problem, could have been a request for the Court to Cape Fear’s funds owed for service rendered to be released pending the litigation.

As always, there is more than one way to skin a cat. I humbly suggest that when you have such an important case to bring…BRING IT ALL!!

Federal Audit Spurs NC to Recoup from Dentists Who Accept MPW!!

When providers receive Tentative Notices of Overpayment (TNOs), we appeal the findings. And, for the most part, we are successful. Does our State of NC simply roll over when the federal government audits it??

A recent audit by Health and Human Services (HHS) Office of Inspector General (OIG) finds that:

“We recommend that the State agency:

  • refund $1,038,735 to the Federal Government for unallowable dental services provided to MPW beneficiaries after the day of delivery; and
  • increase postpayment reviews of dental claims, including claims for MPW beneficiaries, to help ensure the proper and efficient payment of claims and ensure compliance with
    Federal and State laws, regulations, and program guidance.”

MPW is Medicaid for Pregnant Women.  Recently, I had noticed that a high number of dentists were receiving TNOs.  See blog.  I hear through the grapevine that a very high number of dentists recently received TNOs claiming that the dentists had rendered dental services to women who had delivered their babies.

Now we know why…

However, my question is: Does NC simply accept the findings of HHS OIG without requesting a reconsideration review and/or appeal?

It seems that if NC appealed the findings, then NC would not be forced to seek recoupments from health care providers.  We already have a shortage of dentists for Medicaid recipients.  See blog and blog.

And if the federal auditors audit in similar fashion to our NC auditors, then the appeal would, most likely, be successful. Or, in the very least, reduce the recouped amount, which would benefit health care providers and taxpayers.

Whenever NC receives a federal audit with an alleged recoupment, NC should fight for NC Medicaid providers and taxpayers!!  Not simply roll over and pay itself back with recoupments!

This audit was published March 2015.  It is September.  I will look into whether there is an appeal on record.

False Claims Act: The Medicare Horror Story

What the heck is the False Claims Act and why is it important to you?

When it comes to Medicaid and Medicare, the ghoulish phrase “False Claims Act” is frequently thrown around. If you google False Claims Act (FCA) under the “news” option, you will see some chilling news article titles.

  • Pediatric Services of America, units to pay $6.88 in False Claims
  • NuVasive, Inc. Agrees to Pay $13.5 Million to Resolve False Claims
  • California Oncologist Pays $736k to Settle False Claims Allegations

False claims cases tend to be high dollar cases for health care providers; many times the amounts are at issue that could potentially put the provider out of business. FCA is spine-chilling, and many health care providers would rather play the hiding child rather than the curious investigator in a horror story.  Come on, let’s face it, the curious characters usually get killed.  But, this is not a horror story, and it is imperative that providers are informed of the FCA and potential penalties.

I have blogged about post payment reviews that use extrapolation, which result in astronomical alleged overpayments. See blog and blog.  Interestingly, these alleged overpayments could also be false claims.  It is just a matter of which governmental agency is pursuing it (or person in the case of qui tem cases).

But the ramifications of false claims allegations are even more bloodcurdling than the astronomical alleged overpayments. It is important for you to understand what false claims are and how to prevent yourself from ever participating in a false claim, knowingly or unknowingly.

First, what is a false claim?

A false claims occurs when you knowingly present, or cause to be presented, to the US Government a false or fraudulent claim for payment or approval. (abridged version).

Let’s analyze.

The false claim does not have to be billed with actual knowledge that it is false or fraudulent. The false claim does not even have to be fraudulent; it can be merely false. The distinction lies in that a fraudulent claim is one that you intentionally alter. A false claim could merely be incorrect information.  Saying it another way, the false claim can be a false or incorrect claim that you had no actual knowledge was false. That is hair-raising.

What is the penalty? It is:

A civil penalty of not less than $5,500 and not more than $11,000 per claim, plus 3 times the amount of the claim. You can see why these are high dollar cases.

The federal government recovered a jaw-dropping $5.7 billion in 2014 under the False Claims Act (FCA). In 2013, the feds recovered $5 billion under the FCA. Expect 2015 to be even higher.  Since the inception of the Affordable Care Act (ACA), FCA investigations have increased.

Overwhelmingly, the recoveries are from the health care industry.

Everyone knows that the Medicare Claims Processing Manual is esoteric, verbose, and vague. Let’s face it: just Chapter 1 “General Billing Requirements” alone is 313 pages! Besides me, who reads the Medicare Claims Processing Manual cover to cover? Who, besides me, needs to know that Medicare does not cover deported beneficiaries or the exceptions to the Anti-markup Payment Limitation?

Not to mention, the Manual is not law. The Manual does not get approved by Congress. The Manual is guidance or policy.

However, in FCA cases, you can be held liable for items in the Medicare Claims Processing Manual of which you were not aware. In other words, in FCA cases, you can be found liable for what you should have known.

Real life hypotheticals:

Hospital submits claims to Medicare and received payment for services rendered in a clinical trial involving devices to improve organ transplants. Unbeknownst to the hospital, the Manual prohibits Medicare reimbursements for non-FDA approved services.

Physician A has reciprocal arrangement with Physician B. A undergoes personal surgery and B serves A’s Medicare Part B patients while A is recovering. A returns and bills Medicare and is paid for services rendered by B 61 days+ after A left the office.

A physician accepts assignment of a bill of $300 for covered Medicare services and collects $80 from the enrollee. Physician neglects to depict on the claim form that he/she collected anything from the patient. Medicare’s allowable amount is $250, and since the deductible had previously been met, makes payment of $200 to the physician.

These are just a few examples of situations which could result in a FCA allegation.

But do not fret! There are legal defenses written into the Social Security Act that provides protection for health care providers!

Important take-aways:

1. Check whether you have insurance coverage for FCA.
2. Have an attorney on hand with FCA experience.
3. Read portions of the Medicare Claims Billing Manual which are pertinent to you.

Most importantly, if you are accused of billing false claims, get your advocate sooner rather than later! Do not engage in any conversations or interviews without counsel!

Appeal all findings!

Supreme Court Upholds Obamacare! Three Judges Dissent, Calling the Decision Absurd!

Mark this day, June 25,2015 (also my daughter’s 10th birthday) as also the birth of a new state.  Our country, according to the Supreme Court’s decision in King v. Burwell, now consists of 51 states.  The Health and Human Services (HHS) is now our 51st state.

Today the Supreme Court decided the King v. Burwell case.

If you recall, this case was to determine whether the plain language of the Affordable Care Act (ACA) should be upheld.  According to the ACA, people were to receive tax subsidies or “premium tax credits” to subsidize certain purchases of health insurance made on Exchanges, but only those enrolled in through an Exchange established by the State under [§18031]. §36B(c)(2)(A).

See blog.

“Specifically, the question presented is whether the Act’s tax credits are available in States that have a Federal Exchange.”

“At this point, 16 States and the District of Columbia have established their own Exchanges; the other 34 States have elected to have HHS do so.”

In Justice Scalia’s words, “This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.”

However, the majority disagrees.

Apparently, HHS is now our 51st state.

The upshot of the Decision is that the majority found that, despite our country’s deep-rooted, case law precedent that when a statute is unambiguous that the plain meaning of the statute prevails.  Despite hundreds of years of the Supreme Court upholding statutes’ clear meanings, the Supreme Court, in this case, decided that “[i]n extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”

Therefore, when the ACA became law, and the word “state” was used, surely, Congress meant “state and/or federal government.”  Or, on the other hand, let’s just call HHS a state for the purpose of the ACA.

In Justices Scalia, Thomas, and Alito’s opinions, the decision is absurd.  In the dissent they write, “The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”