Category Archives: Office of Administrative Hearings
New case law supports due process for Medicare providers. As first seen on RACMonitor.
Due process is one of the cornerstones of our society. Due process is the universal guarantee and found in the Fifth Amendment to the United States Constitution, which provides “No person shall…be deprived of life, liberty, or property, without due process of law,” and is applied to all states by the 14th Amendment. From this basic principle flows many legal decisions determining both procedural and substantive rights.
For Medicare and Medicaid providers, however, due process, in the past, has been nonexistent. Imagine that you are accused of owing $5 million to the government. Perhaps it was a CPT® code error. You disagree. You believe that your documentation was proper and that you filed for reimbursement correctly. You appeal the decision that you owe $5 million. You continue conducting business as normal. Suddenly, you realize the government is recouping the $5 million now. Prior to any hearing before a judge. You haven’t been found guilty. What happened to innocent until proven guilty? What happened to due process?
For Medicare appeals there is a five-step appeal process. The law requires the government not to recoup during the first and second levels of appeal. But the first and second levels are jumping through hoops and are not normally successful. It is at the third level – the appeal to an impartial administrative judge – that the alleged recoupments are overturned.
After the second level, according to the black letter of the law, the government can begin recouping the alleged overpayment.
Sadly, in the past, the courts have held that it is proper for the government to recoup reimbursements after the second level. Even though, no hearing has been held before an impartial judge and you haven’t been found guilty of owing the money.
On Sept. 27, 2018, another U.S. District Court in South Carolina has agreed with courts in Texas by granting a provider’s request for a Temporary Restraining Order (TRO) to prevent the Centers for Medicare and Medicaid Services (CMS) from recouping monies until after Administrative Law Judge (ALJ) hearings have been held (Accident, Injury and Rehabilitation, PC, c/a No. 4:18-cv-02173, September 27, 2018).
A new trend in favor of providers seems to be arising. This is fantastic news for providers across the country!
Accident, Injury & Rehab, PC found that the ALJ stage of the appellate process is the most important for providers, as it provides the first opportunity for plaintiff to cross examine defendant’s witnesses and examine the evidence used to formulate the statistical sample. According to the American Hospital Association (AHA), 66 percent of Recovery Audit Contractor (RAC) denials are reversed by an ALJ (I actually believe the percentage is higher). The court found that plaintiff’s procedural due process rights were violated by premature recoupment. The court granted Accident, Injury & Rehab, PC’s preliminary injunction restraining and enjoining the government from withholding Medicare payments during the appeal process.
When the government starts recouping filing a preliminary injunction has been shown it to be the best course.
In the past, most preliminary injunctions asking the court to order the government to stop recoupments until a hearing was held was dismissed based on jurisdiction. In other words, the courts held that the courts did not have the authority to render an opinion as to recoupments prior to a hearing. Now, however, the trend is turning, and courts are starting to rule in favor of the provider, finding a violation of procedural due process based on a collateral claim exception.
There are four criteria in order to win a preliminary injunction. A party seeking a preliminary injunction must establish all for the following criteria: (1) that the party is likely to succeed on the merits; (2) that the party is likely to suffer irreparable harm in the absence of preliminary injunction; (3) that the balance of the equity tips in the party’s favor; and (4) that injunction is in the public interest.
There is an esoteric legal theory called exhaustion of administrative remedies. So jurisdiction is the question. There are exceptions to the judicial bar. The Supreme Court of United States articulated a collateral claim exception. The Supreme Court permitted a plaintiff to bring a procedural due process claim requesting an evidentiary area hearing before the termination of disability benefits. There are nonwaivable and waivable jurisdictional elements the nonwaivable requirement is that a claim must be presented to the administrative agency. The waivable requirement is that administrative remedies be exhausted.
The Collateral claim exception is when a party brings a claim in federal court when that “constitutional challenge is entirely collateral to its substantive claim of entitlement.”
The new trend in case law is that the courts are finding that the provider’s right to not undergo recoupment during the appeal process is a collateral issue as to the substantive issue of whether the provider owes the money. Therefore, the courts have found jurisdiction as to the collateral issue.
The proverbial ship has sailed. According to courts in Texas and now South Carolina, CMS cannot recoup monies prior to hearings before ALJs. Providers facing large recoupments should file TROs to prevent premature recoupments and to obtain due process.
When action happens in the Medicare/caid world, it happens quickly. Sometimes you do not receive adequate notice to coordinate continuity of care for your consumers or patients. For example, on August 3, 2018, the Center for Medicare and Medicaid Services announced that at midnight on August 18, 2018, it would be terminating the contract between CMS and ESEC, LLC, an Oklahoma-based surgery center.
CMS provided ESEC 15 days notice of complete termination of Medicare and Medicaid reimbursements. Now I do not know the details of ESEC’s financial reliance on Medicare or Medicaid, but, these days, few providers are solely third-party pay or cash-only. I can only assume that ESEC is scrambling to initiate a lawsuit to remain afloat and open for business. Or ESEC is praying for a “rescind” by correcting whatever issues it purportedly had. Personally, I would not count on a possible rescind. I would be proactively seeking legal intervention.
Here are some examples of recent terminations and the notice received by the providers:
- Baylor St. Luke’s Medical Center’s heart transplant program lost federal funding August 17, 2018. The hospital will no longer be able to bill Medicare and Medicaid for heart transplants.
- Effective August 9, 2018, Brookwood Baptist Medical Center’s Medicare contract was terminated. The notice was published July 25, 2018.
- As of August 12, 2018, The Grandview Nursing & Rehabilitation Facility’s Medicare contract was terminated. Notice of the termination was published August 1, 2018.
- As of September 1, 2018, Compassus-Kansas City, a hospice company, will lose its Medicare contract. Notice was provided August 17, 2018.
- On August 3, 2018, CMS announced that it was terminating Deligent Health Services Inc.’s Medicare and Medicaid contact, effective December 5, 2017. (That is quite a retroactive timeframe).
Can Careless Judy put a healthcare provider out of business?
This happens all the time. Sure, ESEC probably had knowledge that CMS was investigating it. However, CMS has the authority to issue these public notices of termination without holding a hearing to determine whether CMS’ actions are accurate. What if Careless Judy in Program Integrity made a human error and ESEC actually does meet the standards of care. But you see, Careless Judy accidentally used the minimum standards of care from 2008 instead of 2018. It’s an honest mistake. She had no malice against ESEC. But, my point is – where is the mechanism that prevents a surgical ambulatory center from going out of business – just because Careless Judy made a mistake?
To look into whether any legal mechanism exists to prevent Careless Judy from putting the ambulatory center out of business, I turn to the legal rules.
42 CFR 488.456 governs terminations of provider agreements. Subsection (a) state that termination “ends – (1) Payment to the facility; and (2) Any alternative remedy.”
Subsection (b) states that CMS or the State may terminate the contract with the provider if the provider “Is not in substantial compliance with the requirements of participation, regardless whether immediate jeopardy is present.” On the bright side, if no immediate jeopardy exists then CMS or the State must give 15 days notice. If there is found to be immediate jeopardy, the provider get 2 days. But who determines what is “substantial compliance?” Careless Judy?
42 CFR 489.53 lists the reasons on which CMS may rely to terminate a provider. Although, please note, that the regulations use the word “may” and not “must.” So we have some additional guidance as to when a provider’s contract may be terminated, but it still seems subjective. Here are the reasons:
- The provider is not complying with the provisions of title XVIII and the applicable regulations of this chapter or with the provisions of the agreement.
- The provider or supplier places restrictions on the persons it will accept for treatment and it fails either to exempt Medicare beneficiaries from those restrictions or to apply them to Medicare beneficiaries the same as to all other persons seeking care.
- It no longer meets the appropriate conditions of participation or requirements (for SNFs and NFs) set forth elsewhere in this chapter. In the case of an RNHCI no longer meets the conditions for coverage, conditions of participation and requirements set forth elsewhere in this chapter.
- It fails to furnish information that CMS finds necessary for a determination as to whether payments are or were due under Medicare and the amounts due.
- It refuses to permit examination of its fiscal or other records by, or on behalf of CMS, as necessary for verification of information furnished as a basis for payment under Medicare.
- It failed to furnish information on business transactions as required in § 420.205 of this chapter.
- It failed at the time the agreement was entered into or renewed to disclose information on convicted individuals as required in § 420.204 of this chapter.
- It failed to furnish ownership information as required in § 420.206 of this chapter.
- It failed to comply with civil rights requirements set forth in 45 CFR parts 80, 84, and 90.
- In the case of a hospital or a critical access hospital as defined in section 1861(mm)(1) of the Act that has reason to believe it may have received an individual transferred by another hospital in violation of § 489.24(d), the hospital failed to report the incident to CMS or the State survey agency.
- In the case of a hospital requested to furnish inpatient services to CHAMPUS or CHAMPVA beneficiaries or to veterans, it failed to comply with § 489.25 or § 489.26, respectively.
- It failed to furnish the notice of discharge rights as required by § 489.27.
- The provider or supplier refuses to permit copying of any records or other information by, or on behalf of, CMS, as necessary to determine or verify compliance with participation requirements.
- The hospital knowingly and willfully fails to accept, on a repeated basis, an amount that approximates the Medicare rate established under the inpatient hospital prospective payment system, minus any enrollee deductibles or copayments, as payment in full from a fee-for-service FEHB plan for inpatient hospital services provided to a retired Federal enrollee of a fee-for-service FEHB plan, age 65 or older, who does not have Medicare Part A benefits.
- It had its enrollment in the Medicare program revoked in accordance to § 424.535 of this chapter.
- It has failed to pay a revisit user fee when and if assessed.
- In the case of an HHA, it failed to correct any deficiencies within the required time frame.
- The provider or supplier fails to grant immediate access upon a reasonable request to a state survey agency or other authorized entity for the purpose of determining, in accordance with § 488.3, whether the provider or supplier meets the applicable requirements, conditions of participation, conditions for coverage, or conditions for certification.
As you can see from the above list of possible termination reasons, many of which are subjective, it could be easy for Careless Judy to terminate a Medicare contract erroneously, based on inaccurate facts, or without proper investigation.
The same is true for Medicaid; your contract can be terminated on the federal or state level. The difference is that at the state level, Careless Judy is a state employee, not a federal.
42 CFR 498.5 governs appeal rights for providers contract terminations. Subsection (b) states that “Any provider dissatisfied with an initial determination to terminate its provider agreement is entitled to a hearing before an ALJ.”
42 CFR 498.20 states that an initial determination by CMS (like a contract termination) is binding unless it is reconsidered per 42 CFR 498.24.
A Stay of the termination should suspend the termination until the provider can obtain a hearing by an impartial tribunal until the appeal has been completed. The appeal process and supposed automatic Stay of the termination is the only protection for the provider from Careless Judy. Or filing an expensive injunction.
There is a federal regulation that is putting health care providers out of business. It is my legal opinion that the regulation violates the U.S. Constitution. Yet, the regulation still exists and continues to put health care providers out of business.
Because so far, no one has litigated the validity of the regulation, and I believe it could be legally wiped from existence with the right legal arguments.
How is this important?
Currently, the state and federal government are legally authorized to immediately suspend your Medicare or Medicaid reimbursements upon a credible allegation of fraud. This immense authority has put many a provider out of business. Could you survive without any Medicare or Medicaid reimbursements?
The federal regulation to which I allude is 42 CFR 455.23. It is a federal regulation, and it applies to every single health care provider, despite the service type allowed by Medicare or Medicaid. Home care agencies are just as susceptible to an accusation of health care fraud as a hospital. Durable medical equipment agencies are as susceptible as dentists. Yet the standard for a “credible allegation of fraud” is low. The standard for which the government can implement an immediate withhold of Medicaid/care reimbursements is lower than for an accused murderer to be arrested. At least when you are accused of murder, you have the right to an attorney. When you are accused to health care fraud on the civil level, you do not receive the right to an attorney. You must pay 100% out of pocket, unless your insurance happens to cover the expense for attorneys. But, even if your insurance does cover legal fees, you can believe that you will be appointed a general litigator with little to no knowledge of Medicare or Medicaid regulatory compliance litigation.
42 USC 455.23 states that:
“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.
(2) The State Medicaid agency may suspend payments without first notifying the provider of its intention to suspend such payments.
(3) A provider may request, and must be granted, administrative review where State law so requires.”
In the very first sentence, which I highlighted in red, is the word “must.” Prior to the Affordable Care Act, this text read “may.” From my years of experience, every single state in America has used this revision from “may” to “must” for governmental advantage over providers. When asked for good cause, the state and or federal government protest that they have no authority to make a decision that good cause exists to suspend any reimbursement freeze during an investigation. But this protest is a pile of hooey.
In reality, if anyone could afford to litigate the constitutionality of the regulation, I believe that the regulation would be stricken an unconstitutional.
Here is one reason why: Due Process
The Fifth and Fourteenth Amendments to the Bill of Rights provide us our due process rights. Here is the 5th Amendment:
“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”
There have been a long and rich history of interpretation of the due process clause. The Supreme Court has interpreted the due process clauses to provide four protections: (1) procedural due process (in civil and criminal proceedings), (2) substantive due process, (3) a prohibition against vague laws, and (4) as the vehicle for the incorporation of the Bill of Rights.
42 CFR 455.23 violates procedural due process.
Procedural due process requires that a person be allowed notice and an opportunity to be heard before a government official takes a person’s life, liberty, or property.
Yet, 42 CFR 455.23 allows the government to immediately withhold reimbursements for services rendered based on an allegation without due process and taking a provider’s property; i.e., money owed for services rendered. Isn’t this exactly what procedural due process was created to prevent???? Where is the fundamental fairness?
42 CFR 455.23 violates substantive due process.
The Court usually looks first to see if there is a fundamental right, by examining if the right can be found deeply rooted in American history and traditions.
Fundamental rights include the right to vote, right for protection from pirates on the high seas (seriously – you have that right), and the right to constitutional remedies. Courts have held that our right to property is a fundamental right, but to my knowledge, not in the context of Medicare/caid reimbursements owed; however, I see a strong argument.
If the court establishes that the right being violated is a fundamental right, it applies strict scrutiny. This test inquires into whether there is a compelling state interest being furthered by the violation of the right, and whether the law in question is narrowly tailored to address the state interest.
Where the right is not a fundamental right, the court applies a rational basis test: if the violation of the right can be rationally related to a legitimate government purpose, then the law is held valid.
Taking away property of a Medicare/caid provider without due process violates substantive due process. The great thing about writing your own blog is that no one can argue with you. Playing Devil’s advocate, I would anticipate that the government would argue that a suspension or withhold of reimbursements is not a “taking” because the withhold or suspension is temporary and the government has a compelling reason to deter health care fraud. To which, I would say, yes, catching health care fraud is important – I am in no way advocating for fraud. But important also is the right to be innocent until proven guilty, and in civil cases, our deeply-rooted belief in the presumption of innocence is upheld by the action at issue not taking place until a hearing is held.
For example, if I sue my neighbor and declare that he is encroaching on my property, the property line is not moved until a decision is in my favor.
Another example, if I sue my business partner for breach of contract because she embezzled $1 million from me, I do not get the $1 million from her until it is decided that she actually took $1 million from me.
So to should be – if a provider is accused of fraud, property legally owned by said provider cannot just be taken away. That is a violation of substantive due process.
42 CFR 455.23 violates the prohibition against vague laws
A law is void for vagueness if an average citizen cannot understand it. The vagueness doctrine is my favorite. According to census data, there are 209.3 million people in the US who are over 24-years. Of those over 24-years-old, 66.9 million have a college degree. 68% do not.
Although here is a quick anecdote: Not so sure that a college degree is indicative of intelligence. A recent poll of law students at Columbia University showed that over 60% of the students, who were polled, could not name what rights are protected by the 1st Amendment. Once they responded “speech,” many forgot the others. In case you need a refresher for the off-chance that you are asked this question in an impromptu interview, see here.
My point is – who is to determine what the average person may or may not understand?
Back to why 42 CFR 455.23 violates the vagueness doctrine…
Remember the language of the regulations: “The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud…”
“Credible allegation of fraud” is defined as an allegation, which has been verified by the State, from any source, including but not limited to the following:
- Fraud hotline complaints.
- Claims data mining.
- Patterns identified through provider audits, civil false claims cases, and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability and the State Medicaid agency has reviewed all allegations, facts, and evidence carefully and acts judiciously on a case-by-case basis.”
With a bit of research, I was able to find a written podcast published by CMS. It appears to be a Q and A between two workers at CMS discussing whether they should suspend a home health care agency’s reimbursements, similar to a playbook. I assume that it was an internal workshop to educate the CMS employees considering that the beginning of the screenplay begins with a “canned narrator” saying “This is a Medicaid program integrity podcast.”
The weird thing is that when you pull up the website – here – you get a glimpse of the podcast, but, at least on my computer, the image disappears in seconds and does not allow you to read it. I encourage you to determine whether this happens you as well.
While the podcast shimmered for a few seconds, I hit print and was able to read the disappearing podcast. As you can see, it is a staged conversation between “Patrick” and “Jim” regarding suspicion of a home health agency falsifying certificates of medical necessity.
On page 3, “Jim” says, “Remember the provider has the right to know why we are taking such serious action.”
But if your Medicare/caid reimbursements were suddenly suspended and you were told the suspension was based upon “credible allegations of fraud,” wouldn’t you find that reasoning vague?
42 CFR 455.23 violates the right to apply the Bill of Rights to me, as a citizen
This esoteric doctrine only means that the Bill of Rights apply to State governments. [Why do lawyers make everything so hard to understand?]
Last week, (May 22nd) the Center for Medicare and Medicaid Services (CMS) unveiled a new, streamlined appeal process aimed at decreasing the massive Medicare appeal backlog. CMS is hopeful that providers, like you, will choose to settle your Medicare appeal cases instead continuing the litigious dispute. Remember, currently, the backlog at the third level of Medicare appeals, the administrative law judge (ALJ) level, is approximately 5 – 8 years (I will use 8 years for the purpose of this blog). Recoupment can legally begin after level two, so many providers go out of business waiting to be heard at the third level. See blog.
The new “settlement conference facilitation” (SCF) process will allow CMS to make a settlement offer and providers have seven days to accept or proceed with the longer-lasting route. I have a strong sense that, if litigated, a judge would find forcing the decision between accepting a quick settlement versus enduring an 8-year waiting-period to present before an ALJ, coercion. But, for now, it is A choice other than the 8-year wait-period (as long as the provider met the eligibility requirements, see below).
To initiate said SCF process, a provider would have to submit a request in writing to CMS. CMS would then have 15 days to reply. If the agency chooses to take part, a settlement conference would occur within four weeks. Like that underlined part? I read the SCF process as saying, even if the provider qualifies for such process, CMS still has the authority to refuse to participate. Which begs the question, why have a process that does not have to be followed?
The SCF process is directed toward sizable providers with older and more substantial, alleged overpayments. In order to play, you must meet the criteria to enter the game. Here are the eligibility requirements:
In fiscal year (FY) 2016, more than 1.2 billion Medicare fee-for-service claims were processed. Over 119 million claims (or 9.7%) were denied. Of the denied claims, 3.5 million (2.9% of all Medicare denied claims) were appealed. That seems surprisingly low to me. But many claims are denied to Medicare recipients, who would be less inclined to appeal. For example, my grandma would not hire an attorney to appeal a denied claim; it would be fiscally illogical. However, a hospital that is accused of $10 million in alleged overpayments will hire an attorney.
In recent years, the Office of Medicare Hearings and Appeals (OMHA) and the Council have received more appeals than they can process within the statutorily-defined time frames. From FY 2010 through FY 2015, OMHA experienced an overall 442% increase in the number of appeals received annually. As a result, as of the end of FY 2016, 658,307 appeals were waiting to be adjudicated by OMHA. Under current resource levels (and without any additional appeals), it would take eight years for OMHA and ten years for the Council to process their respective backlogs.
The SCF “Fix”
While I do not believe that the creation of the SCF process is a fix, it is a concerted step in the right direction. Being that it was just enacted, we do not have any trial results. So many things on paper look good, but when implemented in real life end so poorly. For example, the Titanic.
Considering that there is a court case that found Health and Human Services (HHS) in violation of federal regulations that require level three Medicare appeals to be adjudicated in 90 days, instead of 8 years and HHS failed to follow the Order, claiming impossibility, at least HHS is making baby steps. See blog. At some point, Congress is going to have to increase funding to hire additional ALJs. I can only assume that the Hospital Association and American Medical Association are lobbying to get this action, but you know what they say about assuming…
As broached above, I do not like the fact that – if you do not accept whatever amount CMS proposes as settlement – BOOM – negotiation is over and you suffer the 8-year backlog time, undergo recoupments (that may not be appropriate), and incur tens of thousands of attorneys’ fees to continue litigation. Literally, CMS has no incentive to settle and you have every reason to settle. The only incentive for CMS to settle that I can fathom is that CMS wants this SCF program to be a success for the jury of public opinion, therefore, will try to get a high rate of success. But do not fool yourself.
You are the beggar and CMS is the King.
5th Circuit Finds Subject Matter Jurisdiction For Medicare and Medicaid Providers – Why Collards Matter
“I’d like some spaghetti, please, and a side of meatballs.” – This sentence is illogical because meatballs are integral to spaghetti and meatballs. If you order spaghetti – and -meatballs, you are ordering “spaghetti and meatballs.” Meatballs on the side is not a thing.
Juxtapose, a healthcare provider defending itself from an alleged overpayment, But during the appeal process undergoes a different penalty – the state or federal government begins to recoup future funds prior to a decision that the alleged recoupment is authorized, legal, or warranted. When a completely new issue unrelated to the allegation of overpayment inserts itself into the mix, then you have spaghetti and meatballs with a side of collard greens. Collard greens need to be appealed in a completely different manner than spaghetti and meatballs, especially when the collard greens could put the company out of business because of the premature and unwarranted recoupments without due process.
I have been arguing this for years based off of, not only, a 1976 Supreme Court case, but multiple state case law, as well as, success I have had in the federal and administrative courts, and BTW – logic.
On March 27, 2018, I was confirmed again. The Fifth Circuit Court of Appeals decided a landmark case for Medicare and Medicaid providers across the country. The case, Family Rehab., Inc. v Azar, 2018 U.S. App. LEXIS 7668, involved a Medicare home health service provider, which was assessed for approximately $7.8 million in Medicare overpayments. Family Rehab, the plaintiff in the case, relied on 88% to 94% of its revenue from Medicare. The company had timely appealed the alleged overpayment, and it was at the third level of the Medicare five step process for appeals. See blog. But there is a 3 – 5 year backlog on the third level, and the government began to recoup the $7.8 million despite the ongoing appeal. If no action were taken, the company would be out of business well-before any ALJ could rule on the merits of the case, i.e. whether the recoupment was warranted. How is that fair? The provider may not owe $7.8 million, but before an objective tribunal decides what is actually owed, if anything, we are going to go ahead and take the money and reap the benefit of any interest accrued during the time it takes the provider to get a hearing.
The backlog for Medicare appeals at the ALJ level is unacceptably long. See blog and blog. However, the federal regulations only prevent recoupment during the appeal process during the first and second levels. This is absolutely asinine and should be changed considering we do have a clause in the Constitution called “due process.” Purported criminals receive due process, but healthcare providers who accept Medicare or Medicaid, at times, do not.
At the third level of appeal, Family Rehab underwent recoupments, even though it was still appealing the decision, which immediately stifled Family Rehab’s income. Family Rehab, because of the premature recoupments, was at risk of losing everything, going bankrupt, firing its staff, and no longer providing medically necessary home health services for the elderly. This situation mimics a situation in which I represented a client in northern Indiana who was losing its Medicaid contract. I also successfully obtained a preliminary injunction preventing the provider from losing its Medicaid contract. See blog.
It is important to note that in this case the ZPIC had audited only 43 claims. Then it used a statistical method to extrapolate the alleged over-billings and concluded that the alleged overpayment was $7,885,803.23. I cannot tell you how many times I have disputed an extrapolation and won. See blog.
42 USC 1395(f)(f)(d)(1)(A) states that the ALJ shall conduct and conclude the hearing and render a decision no later than 90 days after a timely request. Yet the Fifth Circuit Court of Appeals found that an ALJ hearing would not be forthcoming not within 90 days or even 900 days. The judge noted in his decision that the Medicare appeal backlog for an ALJ hearing was 3 – 5 years. The District Court held that it lacked subject matter jurisdiction because Family Rehab had not exhausted its administrative remedies. Family Rehab appealed.
On appeal, Family Rehab argued the same arguments that I have made in the past: (1) its procedural due process and ultra vires claims are collateral to the agency’s appellate process; and (2) going through the appellate process would mean no review at all because the provider would be out of business by the time it would be heard by an ALJ.
What does collateral mean? Collard greens are collateral. When you think collateral; think collards. Collard greens do not normally come with spaghetti and meatballs. A collateral issue is an issue that is entirely collateral to a substantive agency decision and would not be decided through the administrative appeal process. In other words, even if Family Rehab were to only pursue the $7.8 million overpayment issue through the administrative process, the issue of having money recouped and the damage to the company that the recoupment was causing would never be heard by the ALJ because those “collateral” issues are outside the ALJ’s purview. The premature recoupment issue could not be remedied by an ALJ. The Fifth Circuit Court of Appeals agreed.
The collateral argument also applies to terminations of Medicare and Medicaid contracts without due process. In an analogous case (Affiliated Professional), the provider argued that the termination of its Medicare contract without due process violated its right to due process and the Equal Protection Clause and was successful.
The upshot is obvious, if the Court must examine the merits of the underlying dispute, delve into the statute and regulations, or make independent judgments as to plaintiff’s eligibility under a statute, the claim is not collateral.
The importance of this case is that it verifies my contention that if a provider is undergoing a recoupment or termination without due process, there is relief for that provider – an injunction stopping the premature recoupments or termination until due process has been completed.
What in the world is administrative law???? If you are a Medicare or Medicaid provider, you better know!
Most of my blogs are about Medicare and Medicaid providers and the tangled web of regulatory rules and regulations that they must abide by in order to continue providing medically necessary services to our most-needy and elderly populations. This time, however, I am going to blog about (1) administrative law 101 (which I am coming to the realization that few providers understand); and (2) out-of-state attorneys – and why you may need to seek out an attorney from another state from which you live (and why it is possible). Attorneys are licensed state-by-state and, lately, I’ve gotten a lot of questions about “how can you represent me in Nevada when you are in NC?” and when I Googled this topic – I found that there is very little information out there. I am here to teach and teach I will. Read on if you want to learn; close this browser if you do not. The other goal of this blog is to educate you on administrative law. Because administrative law is vastly different than normal law, yet it pertains to Medicare and Medicaid providers, such as you. My last goal with this blog is to educate you on the expense of hiring an attorney and why, in some instances, it may be more costly than others. Whew! We have a lot to go through!
Let’s get started…
A lot of potential clients often ask me how are you able to represent me in Nebraska when you live in North Carolina? Or Alaska? (yes, I have a client in Alaska). I figured I should clear up the confusion. (The “administrative law class” portion of this blog is interwoven throughout the blog – not my best blog, organizational-wise; but we cannot all be perfect).
There are three ways in which an attorney can represent an out-of-state client if that attorney does not have the State’s Bar license for the State in which you reside. Just in case you didn’t know, attorneys get licensed on a state-by-state basis. For example, I have my Bar licenses in North Carolina and Georgia. It is similar to how physicians have to get State licenses. However, I represent healthcare providers in approximately 30 states. I don’t have a client in Iowa yet, so any healthcare providers in Iowa – Hello!! Now we need to understand – how is this possible?
Let’s take a step back, in case there are those who are wondering what a Bar license is; it is a license to practice law and, literally, means that you can go past the bar in a courtroom.
The first way in which in attorney can represent an out-of-state client is because most Medicaid and Medicare provider appeals must be brought before Administrative Court. In North Carolina, our Administrative Court is called the Office of Administrative Hearings (OAH). OAH is the administrative agency for the Judicial Branch. An Administrative Court is the type of court specializing in administrative law, particularly in disputes concerning the exercise of public power. Their role is to ascertain that official/governmental acts are consistent with the law. Such courts are considered separate from general courts. For most state’s Administrative Courts, attorneys do not have to be licensed in that state. Most people don’t know the difference between Administrative Courts versus normal civil courts, like Superior and District courts. Or Magistrate Courts, for example, where Judge Judy would be. I certainly didn’t know what administrative law was even after I graduated law school. Quite frankly, I didn’t take the administrative law class in law school because I had no idea that I would be doing 89.125% administrative law in my real, adult life (I still file federal and state injunctions and sue the government in civil court, but the majority of my practice is administrative).
Administrative laws, which are applicable to Medicare and Medicaid providers, are laws pertaining to administrative agencies (seems self-defining). Administrative court is defined as a court that specializes in dealing with cases relating to the way in which government bodies exercise their powers.
There are literally hundreds of federal administrative agencies, including the Environmental Protection Agency, known as the EPA. If I have a pollution complaint, I contact the EPA. Another example is the Equal Employment Opportunity Commission, known as the EEOC. This agency is responsible for enforcing federal laws that make it illegal to discriminate a job applicant or employee. If I have a discrimination complaint, I contact the EEOC. Another example is the Consumer Product Safety Commission, known as CPSC, which is the independent agency that oversees the safety of products sold in the United States. If I have a problem with the safety of the product that I bought, I contact the CPSC. Complaints to government agencies, such as the EPA, do not go to normal, civil court. These complaints, otherwise known as petitions for contested case hearings, go to Administrative Court and are overseen by Administrative Law Judges (“ALJs”). Same is true for Medicare and Medicaid provider disputes. You cannot go to Superior Court until you have gone through Administrative Court otherwise your case will be kicked out because of an esoteric legal doctrine known as “exhaustion of administrative remedies.” See blog.
Here is a picture of North Carolina’s Raleigh OAH. You can see, from the picture below, that it does not look like a normal courthouse. It’s a beautiful building – don’t get me wrong. But it does not look like a courthouse.
Our OAH is located at 1711 New Hope Church Road, Raleigh NC, 27609. OAH used to be downtown Raleigh and one of the historic houses, but that got a little cramped.
Complaints about Medicare and Medicaid regulatory compliance issues go to Administrative Court because these complaints are against a government agency known as the Health Service Department or the Department of Health and Human Services, depending on which state within you live – the names may differ, but the responsibility does not.
Bringing a lawsuit in Administrative Court with an out-of-state attorney is the cheapest method. There is no need to pay local counsel to file pleadings. There is no need to pay to be pro hac-ed in (see below). Sure, you have to pay for travel expenses, but as we all know, you get what you pay for. If you don’t have an expert in Medicare or Medicaid in your state you need to look elsewhere. [Disclaimer – I am not saying you have to hire me. Just hire an expert].
Very few states require administrative attorneys to have the State Bar license in which they are practicing. For those few States that do require a State Bar license, even for administrative actions, the second alternative to hire an attorney out-of-state is for the attorney to pro hac into that State. Pro hace vice is a fancy Latin phrase which means, literally, “for on this occasion only.” It allows out-of-state attorneys a way to ask the court to allow them to represent a client in a state in which they do not have a license. Again, the reason why this is important is that in a extremely, niche practices, there may not be an attorney with the expertise you need in your state. I know there are not that many attorneys that do the kind of law that I do, [possibly because it is emotionally-draining (because all your clients are financial and emotional distress), extremely esoteric, yet highly-rewarding (when you keep someone in business to continue to provide medically necessary services), but, at times, overwhelming and, without question, time-consuming]. Did someone say, “Vacation?” “Pro hac-ing in” (defined as the attorney asking the court to allow them to represent a client in a state for which they do not have a license for one-time only) is also helpful when I appear in state or federal courts.
Most states have a limit of how many times an attorney can pro hac. For example, in New Mexico, out-of-state attorneys can only pro hac into New Mexico State courts four times a year. The fee for an attorney to pro hac into a state court varies state-by-state, but the amount is nominal when you compare the fee against how much it would cost to hire local counsel.
Thirdly, is by hiring local counsel. Some cases need to be escalated to federal or state court, and, in these instances, a Bar license in the state in which the case is being pursued is necessary. An example of why you would want to bring a lawsuit in federal or state court instead of an Administrative Court would be if you are asking for monetary damages. An Administrative Court does not have the jurisdiction to award such damages.
This is the scenario that I dislike the most because the client has to pay for another attorney only because their warm body possesses a State Bar license. Generally, local counsel does not do much heavy lifting. As in, they don’t normally contribute to the merits of the case. Because they have the State Bar license, they are used to file and sign-off on pleadings.
The first scenario – in which I represent a out-of-state client in Administrative Court, and do not need to hire local counsel or to get my pro hac, is the cheapest method for clients. As an aside, I spoke with an attorney from a bigger city yesterday and was amazed at his or her billable rates. Apparently, I’m steal.
The second most inexpensive way to hire an attorney from out-of-state is to have them get pro hac-ed in. There is a filing fee of, usually, a few hundred dollars in order to get pro hac-ed in. But, in some states, you don’t have to hire local counsel when you are pro hac-ed in.
The most expensive way to hire an out-of-state attorney is needing to hire local counsel as well. Let’s be honest – attorneys are expensive. Adding another into the pot just ups the ante, regardless how little they do. When attorneys charge $300, $400, or $500 an hour, very few hours add up to a lot of money (or $860/hour….what…zombies?).
If you do not agree with the decision that the Administrative Law Judge renders, then you can appeal to, depending in which state you reside, Superior Court or District Court. If you do not agree with the decision you receive in District Court or Superior Court, you then appeal to the Court of Appeals. On the appellate level, out-of-state attorneys would need to either be pro hac-ed on or hire local counsel.
Premature Recoupment of Medicare or Medicaid Funds Can Feel Like Getting Mauled by Dodgeballs: But Is It Constitutional?
State and federal governments contract with many private vendors to manage Medicare and Medicaid. And regulatory audits are fair game for all these contracted vendors and, even more – the government also contracts with private companies that are specifically hired to audit health care providers. Not even counting the contracted vendors that manage Medicaid or Medicare (the companies to which you bill and get paid), we have Recovery Act Contractors (RAC), Zone Program Integrity Contractors (ZPICs), Medicare Administrative Contractors (MACs), and Comprehensive Error Rate Testing (CERT) auditors. See blog for explanation. ZPICs, RACs, and MACs conduct pre-payment audits. ZPICs, RACs, MACs, and CERTs conduct post-payment audits.
It can seem that audits can hit you from every side.
“Remember the 5 D’s of dodgeball: Dodge, duck, dip, dive and dodge.”
Remember the 5 A’s of audits: Appeal, argue, apply, attest, and appeal.”
Medicare providers can contest payment denials (whether pre-payment or post-payment) through a five-level appeal process. See blog.
On the other hand, Medicaid provider appeals vary depending on which state law applies. For example, in NC, the general process is an informal reconsideration review (which has .008% because, essentially you are appealing to the very entity that decided you owed an overpayment), then you file a Petition for Contested Case at the Office of Administrative Hearings (OAH). Your likelihood of success greatly increases at the OAH level because these hearings are conducted by an impartial judge. Unlike in New Mexico, where the administrative law judges are hired by Human Services Department, which is the agency that decided you owe an overpayment. In NM, your chance of success increases greatly on judicial review.
In Tx, providers may use three methods to appeal Medicaid fee-for-service and carve-out service claims to Texas Medicaid & Healthcare Partnership (TMHP): electronic, Automated Inquiry System (AIS), or paper within 120 days.
In Il, you have 60-days to identify the total amount of all undisputed and disputed audit
overpayment. You must report, explain and repay any overpayment, pursuant to 42 U.S.C.A. Section 1320a-7k(d) and Illinois Public Aid Code 305 ILCS 5/12-4.25(L). The OIG will forward the appeal request pertaining to all disputed audit overpayments to the Office of Counsel to the Inspector General for resolution. The provider will have the opportunity to appeal the Final Audit Determination, pursuant to the hearing process established by 89 Illinois Adm. Code, Sections 104 and 140.1 et. seq.
You get the point.”Nobody makes me bleed my own blood. Nobody!” – White Goodman
Recoupment During Appeals
Regardless whether you are appealing a Medicare or Medicaid alleged overpayment, the appeals process takes time. Years in some circumstances. While the time gently passes during the appeal process, can the government or one of its minions recoup funds while your appeal is pending?
The answer is: It depends.
Before I explain, I hear my soapbox calling, so I will jump right on it. It is my legal opinion (and I am usually right) that recoupment prior to the appeal process is complete is a violation of due process. People are always shocked how many laws and regulations, both on the federal and state level, are unconstitutional. People think, well, that’s the law…it must be legal. Incorrect. Because something is allowed or not allowed by law does not mean the law is constitutional. If Congress passed a law that made it illegal to travel between states via car, that would be unconstitutional. In instances that the government is allowed to recoup Medicaid/care prior to the appeal is complete, in my (educated) opinion. However, until a provider will fund a lawsuit to strike these allowances, the rules are what they are. Soapbox – off.
Going back to whether recoupment may occur before your appeal is complete…
For Medicare audit appeals, there can be no recoupment at levels one and two. After level two, however, the dodgeballs can fly, according to the regulations. Remember, the time between levels two and three can be 3 – 5 years, maybe longer. See blog. There are legal options for a Medicare provider to stop recoupments during the 3rd through 5th levels of appeal and many are successful. But according to the black letter of the law, Medicare reimbursements can be recouped during the appeal process.
Medicaid recoupment prior to the appeal process varies depending on the state. Recoupment is not allowed in NC while the appeal process is ongoing. Even if you reside in a state that allows recoupment while the appeal process is ongoing – that does not mean that the recoupment is legal and constitutional. You do have legal rights! You do not need to be the last kid in the middle of a dodgeball game.
Don’t be this guy:
June 12, 2018, is…
the 163rd day of the year. There will be 202 days left in 2018. It is the 24th Tuesday and the 85th day of spring. It is the Filipino Independence Day. And it is Recoupment Day for 80% or more of NC Medicaid dentists.
DHHS sent an important message to The Society of Oral and Maxillofacial Surgeons that 80% of dentists who accept Medicaid will be undergoing a recoupment – some for over $25,000. But for claims for dates of service 2013 and 2014. Claims that are 4 and 5 years old! Here is the message:
Please read the following email from Dr. Mark Casey with DMA regarding upcoming recoupment of funds from dentists:
Over a year ago, the Division of Medical Assistance (DMA) and our fiscal agent, CSRA, identified defects in NCTracks that had resulted in overpayments to enrolled dental providers in 2013-2014. DMA has been working on a plan to implement two (2) NCTracks system recoupments (claims reprocessing) that will affect a fairly large number of providers. We believe that giving the NCSOMS, other dental professional organizations and our enrolled dental providers plenty of advance notice prior to the recoupment date is a good idea. The number of providers impacted will not be as large as the Medicaid for Pregnant Women (MPW) recoupment of 2015. You will find a summary of the notice below that will be sent to dental professional membership organizations as well as the two dental schools in the state.
DMA has gone through a lengthy process of identifying all providers who received overpayments and developing a plan for the NCTracks system recoupment.
I have seen the list of providers affected and we expect that a large majority (around 80%) will be able to repay the overpayment in one checkwrite based on their past claims activity. There will be some practices/providers who will be responsible for amounts approaching $25,000 or more. Practices with multiple offices will have multiple amounts recouped based on the multiple organization NPIs used for billing for each office. As you can see from the list of CDT codes that were overpaid below – diagnostic/preventive, restorative, denture repairs, extraction and the expose and bond codes (procedure codes where tooth numbers were reported and tooth surfaces were either reported or not reported) — we expect that general dentists, pediatric dentists and oral surgeons will be the dental provider types most affected by this recoupment.
As I indicated above, the messages that the dental professional organizations and the individual providers will be receiving over the next week or so will offer more detail than this email notice from me. If you have any questions or concerns regarding my email, please do not hesitate to contact me.
Mark W. Casey DDS, MPH
Reprocessing of Dental Claims for Overpayment
Issue: Some dental claims that processed in NCTracks beginning July 1, 2013 through April 20, 2014 paid incorrectly resulting in overpayments to providers.
Duplicate dental claims that included a tooth number and no tooth surface such as procedure codes D0220, D0230, D1351, D2930, D2931, D2932, D2933, D2934, D3220, D3230, D3240, D3310, D3320, D3330, D5520, D5630, D5640, D5650, D5660, D7111, D7140, D7210, D7220, D7230, D7240, D7241, and D7250, D7280, and D7283 processed and paid incorrectly in NCTracks between July 1, 2013, and April 20, 2014.
Additionally, duplicate dental claims for restorative services that included a tooth number and one or more tooth surfaces such as procedure codes D2140, D2150, D2160, D2161, D2330, D2331, D2332, D2335, D2391, D2392, D2393, and D2394 processed and paid incorrectly in NCTracks between July 1, 2013 through October 14, 2013.
Based on NC Medicaid billing guidelines, these duplicate claims should have denied. This caused an overpayment to providers.
Action: Duplicate dental claims identified with the two issues documented will be recouped and reprocessed in NCTracks to apply the duplicate editing correctly. Any overpayments identified will be recouped.
Timing: Applicable dental claims will be reprocessed in the June 12, 2018, checkwrite to recoup the overpayments.
Remittance Advice: Reprocessed claims will be displayed in a separate section of the paper Remittance Advice with the unique Explanation of Benefits (EOB) code 10007 ‘DENTAL CLAIM REPROCESSED DUE TO PREVIOUS DUPLICATE PAYMENT’. The 835 electronic transactions will include the reprocessed claims along with other claims submitted for the checkwrite (there is no separate 835 for these reprocessed claims.)
Can DHHS recoup claims that are 4 and 5 years old? How about a mass recoupment without any details as to the reasons for the individual claims being recouped? How about a mass recoupment with no due process?
While we do not have a definitive answer from our court system, my answer is a resounding, “No!”
In a January 11, 2018, opinion, a district court in Florida held that once the government learns of possible regulatory noncompliance or mistakes in billings Medicare or Medicaid, but continues to reimburse the provider for later claims – the fact that the government continues to reimburse the provider – can be evidence in court that the alleged documentation errors are minor and that, if the services are actually rendered, despite the minor mistakes, the provider should not be liable under the False Claims Act.
Here is an example: Provider Smith undergoes a post-payment review of claims from dates of service January 1, 2016 – January 1, 2017. It is February 1, 2018. Today, Smith is told by the RAC auditor that he owes $1 million. Smith appeals the adverse decision. However, despite the accusation of $1 million overpayment, Smith continues providing medically necessary services the exact same way, he did in 2016. Despite the supposed outcome of the post-payment review, Smith continues to bill Medicare and Medicaid for services rendered in the exact same way that he did in 2016.
At least, according to UNITED STATES OF AMERICA AND STATE OF FLORIDA v. SALUS REHABILITATION, LLC, if Smith continues to be reimbursed for services rendered, this continued reimbursement can be evidence in court that Smith is doing nothing wrong.
Many of my clients who are undergoing post-payment or prepayment reviews decrease or cease all together billing for future services rendered. First, and obviously, stopping or decreasing billings will adversely affect them. Many of those clients will be financially prohibited from defending the post or prepayment review audit because they won’t have enough funds to pay for an attorney. Secondly, and less obvious, at least according to the recent decision in Florida district court mentioned above, continuing to bill for and get reimbursed fo services rendered and billed to Medicare and/or Medicaid can be evidence in court that you are doing nothing wrong.
The facts of the Salus Rehabilitation case, are as follows:
A former employee of a health care system comprising of 53 specialized nursing facilities (“Salus”) filed a qui tam claim in federal court asserting that Salus billed the government for unnecessary, inadequate, or incompetent service.
Break from the facts of the case to explain qui tam actions: A former employee who brings a qui tam action is called the “relator.” In general, the reason that former employees bring qui tam cases is money. Relators get anywhere between 15 -30 % of the award of damages. Many qui tam actions result in multi million dollar awards in damages – meaning that a relator can get rich quickly by tattling on (or accusing) a former employer. Qui tam actions are jury trials (why this is important will be explained below).
Come and listen to a story ’bout a man named Jed
Poor mountaineer barely kept his family fed
Then one day he was shooting for some food,
And up through the ground come a bubbling crude
(Oil that is, black gold, Texas tea)
In the Salus case, the relator (Jed) asserted that Salus failured to maintain a “comprehensive care plan,” ostensibly required by a Medicaid regulation and that this failure rendered Salus’ Medicaid claims fraudulent. Also, Jed asserted that a handful of paperwork defects (for example, unsigned or undated documents) demonstrated that Salus never provided the therapy purported by the paperwork and billed to Medicare. Jed won almost $350 million based on the theory “that upcoding of RUG levels and failure to maintain care plans made [the defendants’] claims to Medicare and Medicaid false or fraudulent.” Oil, that is, black gold, Texas tea. You know Jed was celebrating like it was 1999.
Salus did not take it lying down.
The jury had awarded Jed $350 million. But in the legal world there is a legal tool if a losing party believes that the jury rendered an incorrect decision. It is called a Judgment as a Matter of Law. When a party files a Motion for Judgment as a Matter of Law, it is decided by the standard of whether a reasonable jury could find in favor of the party opposing the Motion, but it is decided by a judge.
In Salus, the Judge found that the verdict awarding Jed of $350 million could not be upheld. The Judge found that Jed’s burden was to show that the federal government and the state government did not know about the alleged record-keeping deficiencies but, had the governments known, the governments would have refused to pay Salus for services rendered, products delivered, and costs incurred. The Judge said that the record was deplete of any evidence that the governments would have refused to pay Salus. The Judge went so far to say that, theoretically, the governments could have implemented a less severe punishment, such as a warning or a plan or correction. Regardless, what the government MAY have done was not in the record. Specifically, the Judge held that “The resulting verdict (the $350 million to Jed), which perpetrates one of the forbidden “traps, zaps, and zingers” mentioned earlier, cannot stand. The judgment effects an unwarranted, unjustified, unconscionable, and probably unconstitutional forfeiture — times three — sufficient in proportion and irrationality to deter any prudent business from providing services and products to a government armed with the untethered and hair-trigger artillery of a False Claims Act invoked by a heavily invested relator.”
Wow. In other words, the Judge is saying that the verdict, which awarded Jed $350 million, will cause health care providers to NOT accept Medicare and Medicaid if the government is allowed to call every mistake in documentation “fraud,” or a violation of the False Claims Act. The Judge was not ok with this “slippery slope” result. Maybe he/she depends on Medicare…maybe he/she has a family member dependent on Medicaid…who knows? Regardless, this a WIN for providers!!
Legally, the Judge in Salus hung his hat on Universal Health Services, Inc. v. Escobar, 136 S. Ct. 1989 (2016), a Supreme Court case. In Escobar, the Supreme Court held that nit-picky documentation errors are not material and that materiality is required to condemn a provider under the False Claims Act. Escobar “necessarily means that if a service is non-compliant with a statute, a rule, or a contract; if the non-compliance is disclosed to, or discovered by, the United States; and if the United States pays notwithstanding the disclosed or discovered non-compliance, the False Claims Act provides a relator no claim for “implied false certification.”” (emphasis added). In other words, keep billing. If you are paid, then you can use that as evidence in court.
Escobar specifies that a “rigorous” and “demanding” standard for materiality and scienter precludes a False Claims Act claim based on a “minor or unsubstantial” or a “garden-variety” breach of contract or regulatory violation. Instead, Escobar assumes and enforces a course of dealing between the government and a supplier of goods or services that rests comfortably on proven and successful principles of exchange — fair value given for fair value received. Get it?? This is the first time that I have seen a judge be smart and intuitive enough to say – hey – providers are not perfect…and that’s ok. Providers may have insignificant documentation errors. But it is fundamentally unfair to prosecute a provider under the False Claims Act, which the Act is extraordinarily harsh and punitive, for minor, “garden variety” mistakes.
Granted, Salus was decided with a provider being prosecuted under the False Claims Act and not being accused of a pre or post-payment review finding of alleged overpayment.
But, isn’t it analogous?
A provider being accused that it owes $1 million because of minor documentation errors – but did actually provide the medically necessary services – should be afforded the same understanding that Salus was afforded. The mistakes need to be material. Minor mistakes should not be reasons for a 100% recoupment. Because there must be a course of dealing between the government and a supplier of goods or services that rests comfortably on proven and successful principles of exchange — fair value given for fair value received.
Oil has dried up, Jeb.
You are a Medicare health care provider. You perform health care services across the country. Maybe you are a durable medical equipment (DME) provider with a website that allows patients to order physician-prescribed, DME supplies from all 50 states. Maybe you perform telemedicine to multiple states. Maybe you are a large health care provider with offices in multiple states.
Regardless, imagine that you receive 25, 35, or 45 notifications of alleged overpayments from 5 separate “jurisdictions” (the 5th being Region 5 (DME/HHH – Performant Recovery, Inc.). You get one notice dated January 1, 2018, for $65,000 from Region 1. January 2, 2018, you receive a notice of alleged overpayment from Region 2 in the amount of $210.35. January 3, 2018, is a big day. You receive notices of alleged overpayments in the amounts of $5 million from Region 4, $120,000 from Region 3, and two other Region 1 notices in the amount of $345.00 and $65,000. This continues for three weeks. In the end, you have 20 different notices of alleged overpayments from 5 different regions, and you are terrified and confused. But you know you need legal representation.
Do you appeal all the notices? Even the notice for $345.00? Obviously, the cost of attorneys’ fees to appeal the $345.00 will way outweigh the amount of the alleged overpayment.
Here are my two cents:
Appeal everything – and this is why – it is a compelling argument of harassment/undue burden/complete confusion to a judge to demonstrate the fact that you received 20 different notices of overpayment from 5 different MACs. I mean, you need a freaking XL spreadsheet to keep track of your notices. Never mind that an appeal in Medicare takes 5 levels and each appeal will be at a separate and distinct status than the others. Judges are humans, and humans understand chaos and the fact that humans have a hard time with chaos. For example, I have contractors in my house. It is chaos. I cannot handle it.
While 20 distinct notices of alleged overpayment is tedious, it is worth it once you get to the third level, before an unbiased administrative law judge (ALJ), when you can consolidate the separate appeals to show the judge the madness.
Legally, the MACs cannot withhold or recoup funds while you appeal, although this is not always followed. In the case that the MACs recoup/withhold during your appeal, if it will cause irreparable harm to your company, then you need to get an injunction in court to suspend the recoupment/withhold.
According to multiple sources, the appeal success rate at the first and second levels are low, approximately 20%. This is to be expected since the first level is before the entity that determined that you owe money and the second level is not much better. The third level, however, is before an impartial ALJ. The success rate at that level is upwards of 75-80%. In the gambling game of life, those are good odds.