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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.

RAC Audits: How to Deal with Concurrent, Overpayment Accusations in Multiple Jurisdictions

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.

 

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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.

 

Accused of a Medicare or Medicaid Overpayment? Remember That You May Fall Into an Exception That Makes You NOT Liable to Pay!!

In today’s health care world, post-payment review audits on health care providers who accept Medicare and/or Medicaid have skyrocketed. Part of the reason is the enhanced fraud, waste, and abuse detections that were implanted under ObamaCare. Then the snowball effect occurred. The Centers for Medicare and Medicaid Systems (CMS), which is the single federal agency designated by the Secretary of Health and Human Services (HHS), via authority from Congress, to manage Medicare and Medicaid nationwide, started having positive statistics to show Congress.

Without question, the recovery audit contractors (RACs) have recouped millions upon millions of money since 2011, when implemented. Every financial report presented to Congress shows that the program more than pays for itself, because the RACs are paid on contingency.

Which pushed the snowball down the hill to get bigger and bigger and bigger…

However, I was reading recent, nationwide case law on Medicare and Medicaid provider overpayments reviews (I know, I am such a dork), and I realized that many attorneys that providers hire to defend their alleged overpayments have no idea about the exceptions found in Sections 1870 and 1879 of the Social Security Act (SSA). Why is this important? Good question. Glad you asked. Because of this legal jargon called stare decisis (let the decision stand). Like it or not, in American law, stare decisis is the legal doctrine that dictates once a Court has answered a question,the same question in other cases must elicit the same response from the same court or lower courts in that jurisdiction. In other words, if “Attorney Uneducated” argues on behalf of a health care provider and does a crappy job, that decision, if it is against the provider, must be applied similarly to other providers. In complete, unabashed, English – if a not-so-smart attorney is hired to defend a health care provider in the Medicare and/or Medicaid world, and yields a bad result, that bad result will be applied to all health care providers subsequently. That is scary! Bad laws are easily created through poor litigation.

A recent decision in the Central District of California (shocker), remanded the Medicare overpayment lawsuit back to the Administrative Law Judge (ALJ) level because the ALJ (or the provider’s attorney) failed to adequately assess whether the exceptions found in Sections 1870 and 1879 of the SSA applied to this individual provider. Prime Healthcare Servs.-Huntington Beach, LLC v. Hargan, 2017 U.S. Dist. LEXIS 205159 (Dec., 13, 2017).

The provider, in this case, was a California hospital. The overpayment was a whopping total of $5,380.30. I know, a small amount to fight in the court of law and expend hundreds of thousands of attorneys’ fees. But the hospital (I believe) wanted to make legal precedent. The issue is extremely important to hospitals across the county – if a patient is admitted as inpatient and a contractor of CMS determines in a post payment review that the patient should have been admitted as an outpatient – is the hospital liable for the difference between the outpatient reimbursement rate and the inpatient reimbursement rate? To those who do not know, the inpatient hospital rates are higher than outpatient. Because the issue was so important and would have affected the hospital’s reimbursement rates (and bottom line) in the future, the hospital appealed the alleged overpayment of $5,380.30. The hospital went through the five levels of Medicare appeals. See blog. It disagreed with the ALJ’s decision that upheld the alleged overpayment and requested judicial review.

Judicial review (in the health care context): When a health care providers presents evidence before an ALJ and the ALJ ruled against the provider.The provider appeals the ALJ decision to Superior Court, which stands in as if it is the Court of Appeals. What that means is – that at the judicial review level, providers cannot present new evidence or new testimony. The provider’s attorney must rely on the   official record or transcript from the ALJ level. This is why it is imperative that, at the ALJ level, you put forth your best evidence and testimony and have the best attorney, because the evidence and transcript created from the ALJ level is the only evidence allowed from judicial review.

The exceptions found in Sections 1870 and 1879 of the SSA allow for a provider to NOT pay back an alleged overpayment, even if medical necessity does not exist. It is considered a waiver of the provider’s overpayment. If a Court determines that services were not medically necessary, it must consider whether the overpayment should be waived under Sections 1870 and 1879.

Section 1879 limits a provider’s liability for services that are not medically necessary when it has been determined that the provider “did not know, and could not reasonably have been expected to know, that payment would not be made for such services.” 42 U.S.C. 1395pp(a). A provider is deemed to have actual or constructive knowledge of non-coverage based on its receipt of CMS notices, the Medicare manual, bulletins, and other written directives from CMS. In other words, if CMS published guidance on the issue, then you are out of luck with Section 1879. The Courts always hold that providers are responsible for keeping up-to-date on rules, regulations, and guidance from CMS. “Ignorance of the law is no defense.”

Section 1870 of the SSA permits providers to essentially be forgiven for overpayments discovered after a certain period of time so long as the provider is “without fault” in causing the overpayment. Basically, no intent is a valid defense.

Sections 1879 and 1870 are extraordinary, strong, legal defenses. Imagine, if your attorney is unfamiliar with these legal defenses.

In Prime Healthcare, the Court in the Central District of California held that the ALJ’s decision did not clearly apply the facts to the exceptions of Sections 1870 and 1879. I find this case extremely uplifting. The Judge, who was Judge Percy Anderson, wanted the provider to have a fair shake. Hey, even if the services were not medically necessary, the Judge wanted the ALJ to, at the least, determine whether an exception applied. I feel like these exceptions found in Sections 1870 and 1879 are wholly underutilized.

If you are accused of an overpayment…remember these exceptions!!!

Appeal! Appeal! Appeal!

RAC Audit Preview: And Those on The Chopping Block Are…(Drum Roll, Please)

The Centers for Medicare & Medicaid Services (CMS) posted its December 2017 list of health care services that the Recovery Audit Contractors (RACs) will be auditing. As usual, home health is on the chopping block. So are durable medical equipment providers. For whatever reason, it seems that home health, DME, behavioral health care, and dentists are on the top of the lists for audits, at least in my experience.

Number one RAC audit issue: 

Home Health: Medical Necessity and Documentation Review

To be eligible for Medicare home health services, a beneficiary must have Medicare Part A and/or Part B per Section 1814 (a)(2)(C) and Section 1835 (a)(2)(A) of the Social Security Act:

  • Be confined to the home;
  • Need skilled services;
  • Be under the care of a physician;
  • Receive services under a plan of care established and reviewed by a physician; and
  • Have had a face-to-face encounter with a physician or allowed Non-Physician Practitioner (NPP).

Medical necessity is the top audited issue in home health. Auditors also love to compare the service notes to the independent assessment. Watch it if you fail to do one activity of daily living (ADL). Watch it if you do too many ADLs out of the kindness of your heart. Deviations from the independent assessment is a no-no to auditors, even if you are going above and beyond to be sweet. And never use purple ink!

Number two RAC audit issue:

Annual Wellness Visits (AWV) billed within 12 months of the Initial Preventative Physical Examination (IPPE) or Annual Wellness Examination (AWV)

This is a simple mathematical calculation. Has exactly 12 months passed? To the day….yes, they are that technical. 365 days from a visit on January 7, 2018 (my birthday, as an example) would be January 7, 2019. Schedule any AWV January 8, 2019, or beyond.

Number three RAC audit issue:

Ventilators Subject to DWO requirements on or after January 1, 2016

This will be an assessment of whether ventilators are medically necessary. Seriously? Who gets a ventilator who does not need one? I was thinking the other day, “Self? I want a ventilator.”

Number four RAC audit issue:

Cardiac Pacemakers

This will be an assessment of whether cardiac pacemakers are medically necessary. Seriously? Who gets a pacemaker who does not need one? I was thinking the other day, “Self? I want a pacemaker.” Hospitals are not the only providers targets for this audit. Ambulatory surgical centers (ASCs) also will be a target. As patient care continues its transition to the outpatient setting, ASCs have quickly grown in popularity as a high-quality, cost-effective alternative to hospital-based outpatient care. In turn, the number and types of services offered in the ASC setting have significantly expanded, including pacemakers.

Number five RAC audit issue:

Evaluation and Management (E/M) Same Day as Dialysis

Except when reported with modifier 25, payment for certain evaluation and management services is bundled into the payment for dialysis services 90935, 90937, 90945, and 90947

It is important to remember that if you receive a notice of overpayment, you need to appeal immediately. The first level of appeal is redetermination, usually with the Medicare Administrative Contractor (MAC). Medicare will not begin overpayment collection of debts (or will cease collections that have started) when it receives notice that you  requested a Medicare contractor redetermination (first level of appeal).

See blog for full explanation of Medicare provider appeals.

Knicole Emanuel Featured on Hospital Finance Podcast – Medicare Appeal Backlog (Legal Update)

On September 6, 2017, I appeared on the Besler Hospital Finance Podcast regarding:

Update on the Medicare appeals backlog [PODCAST]

Feel free to listen to the podcast, download it, and share with others!

 

“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.

Medicare Appeals Backlog: Is HHS In Danger of Being Held in Contempt?

Four months after the Center for Medicare and Medicaid Services’ (CMS) Final Rule went in effect (March 2017) attempting to eliminate the Medicare appeal backlog and 6 months before United States District Court for the District of Columbia’s first court-imposed deadline (end of 2017) of reducing the Medicare appeal backlog by 30%, the Department of Health and Human Services (HHS) are woefully far from either. According to HHS’ June 2017 report on the Medicare appeal backlog, 950,520 claims will remain in the backlog by 2021. This is in stark contrast to the District Court’s Order that HHS completely eliminate the backlog by 2020. So will HHS be held in contempt? Throw the Secretary in jail? That is what normally happened when someone violates a Court Order.

Supposedly, HHS’ catastrophic inability to decrease the Medicare appeal backlog is not from a lack of giving the ole college try. But, in its June 2017 report, HHS blames funding.

CMS issued a new Final Rule in January 2017, which took effect March 2017, in hopes of reducing the massive Medicare provider appeal backlog that has clogged up the third level of appeal of Medicare providers’ adverse actions. In the third level of appeal, providers make their arguments before an administrative law judge (ALJ). For information on all the Medicare appeal levels, click here.

The Office of Medicare Hearings and Appeals (OMHA) claims that it currently can adjudicate roughly 92,000 appeals annually. The current backlog is approximately 667,326 appeals that HHS estimates will grow to 950,520 by 2021. The average number of days between filing a Petition with OMHA and adjudicating the case is around 1057.2 days. 

HHS had high hopes that these changes would eliminate the backlog. In HHS’ Final Rule Fact Sheet, it states “with the administrative authorities set forth in the final rule and the FY 2017 proposed funding increases and legislative actions outlined in the President’s Budget, we estimate that that the backlog of appeals could be eliminated by FY 2020.” The changes made to the Medicare appeals process by the January 2017 Final Rule is the following:

Changes to the Medicare Appeals Process

The changes in the final rule are primarily focused on the third level of appeal and will:

  • Designate Medicare Appeals Council decisions (final decisions of the Secretary) as precedential to provide more consistency in decisions at all levels of appeal, reducing the resources required to render decisions, and possibly reducing appeal rates by providing clarity to appellants and adjudicators.
  • Allow attorney adjudicators to decide appeals for which a decision can be issued without a hearing and dismiss requests for hearing when an appellant withdraws the request. That way ALJs can focus on conducting hearings and adjudicating the merits of more complex cases.
  • Simplify proceedings when CMS or CMS contractors are involved by limiting the number of entities (CMS or contractors) that can be a participant or party at the hearing.
  • Clarify areas of the regulations that currently causes confusion and may result in unnecessary appeals to the Medicare Appeals Council.
  • Create process efficiencies by eliminating unnecessary steps (e.g., by allowing ALJs to vacate their own dismissals rather than requiring appellants to appeal a dismissal to the Medicare Appeals Council); streamlining certain procedures (e.g., by using telephone hearings for appellants who are not unrepresented beneficiaries, unless the ALJ finds good cause for an appearance by other means); and requiring appellants to provide more information on what they are appealing and who will be attending a hearing.
  • Address areas for improvement previously identified by stakeholders to increase the quality of the process and responsiveness to customers, such as establishing an adjudication time frame for cases remanded from the Medicare Appeals Council, revising remand rules to help ensure cases keep moving forward in the process, simplifying the escalation process, and providing more specific rules on what constitutes good cause for new evidence to be admitted at the OMHA level of appeal.

In early June 2017, HHS issued its second status report on the Medicare appeals backlog and the outlook does not look good.

CMS held a call on June 29, 2017, to discuss recent regulatory changes intended to streamline the Medicare administrative appeal processes, reduce the backlog of pending appeals, and increase consistency in decision-making across appeal levels.

Now HHS is in danger of violating a Court Order.

In December 2016, the District Court for the District of Columbia held in American Hospital Association v Burwell case Ordered HHS to release to status reports every 90 days and the complete elimination of the backlog by 2020, HHS is also required to observe several intermediary benchmarks: 30% reduction by the end of 2017, 60% by the end of 2018, 90% by the end of 2019, and then ultimately 100% elimination by the end of 2020.

BUT LITTLE TO NOTHING HAS CHANGED.

HHS itself has maintained since the requirements were instituted that the elimination of the backlog would not be possible. June’s report projects 950,520 claims will remain by 2021, but this projection is still very far from meeting the court order.

HHS blames funding.

But even significant increase of funding (from about $107 million in 2017, to $242 million in 2018) will not cure the problem! I find it very disturbing that $242 million could not eliminate the Medicare appeal backlog. So what will happen when HHS fails to meet the Court’s mandate of a 30% reduction of the backlog by the end of 2017? Hold the Secretary in contempt?

The court in Burwell drafted a “what if” into the Decision—the Court stated: “if [HHS] fails to meet [these] deadlines, Plaintiffs may move for default judgment or to otherwise enforce the writ of mandamus.”  This allows the Court authority to enforce its Decision, but it has not motivated HHS to try any innovative procedures to reduce the backlog. So far no additional actions have been attempted, and the backlog remains.

If HHS is in violation of the Court Order at the end of 2017, the Court could issue harsh penalties. (Or the Court could do nothing and be a complete disappointment).

Federal Court Orders HHS to Eliminate Medicare Appeal Backlog!

When you have a Medicare appeal, it is not uncommon for the appeal process to last years and years – up to 3-6 years in some cases. There has been a backlog of approximately 800,000+ Medicare appeals (almost 1 million), which, with no change, would take 11 years to vet.

A Federal Court Judge says – that is not good enough!

Judge James Boasburg Ordered that the Medicare appeal backlog be eliminated in the following stages:

  • 30% reduction from the current backlog by Dec. 31, 2017 (approximately a 300,000 case reduction within 1 year);
  • 60% reduction from the current backlog by Dec. 31, 2018;
  • 90% reduction from the current backlog by Dec. 31, 2019; and
  • Elimination of the backlog of cases by Dec. 31, 2020;

A Medicare appeal has 5 steps. See blog. The backlog is at the Administrative Law Judge (ALJ) level – or, Level 3.

This backlog is largely attributable to the Medicare Recovery Audit Contractor (RAC) programs. In 2010, the federal government implemented the RAC program to recoup allegedly improper Medicare reimbursement payments. The RAC program (for both Medicare and Medicaid) has been criticized for being overly broad and burdensome and “nit picking,” insignificant paperwork errors. See blog.

While the RAC program has recovered a substantial sum of alleged overpayments, concurrently, it has cost health care providers an infinite amount of money to defend the allegations and has left Health and Human Services (HHS) with little funds to adjudicate the number of Medicare appeals, which increase every year. The number of Medicare appeals filed in fiscal year 2011 was 59,600. In fiscal year 2013, that number boomed to more than 384,000. Today, close to 1 million Medicare appeals stand in wait. The statutory adjudication deadline for appeals at the ALJ level is 90 days, yet the average Medicare appeal can last over 546 days.

The American Hospital Association (AHA) said – enough is enough!

AHA sued HHS’ Secretary Sylvia Burwell in 2014, but the case was dismissed. AHA appealed the District Court’s Decision to the Court of Appeals, which reversed the dismissal and gave the District Court guidance on how the backlog could be remedied.

Finally, last week, on December 5, 2016, the District Court published its Opinion and set forth the above referenced mandated dates for eliminating the Medicare appeal backlog.

While, administratively, the case was dismissed, the District Court retained “jurisdiction in order to review the required status reports and rule on any challenges to unmet deadlines.”

In non-legalese, the Court said “The case is over, but we will be watching you and can enforce this Decision should it be violated.”

This is a win for all health care providers that accept Medicare.

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!!

Medicare RAC Audits Are Spreading in 2016

By now, however unwanted, health care providers are intimately acquainted with RAC audits. If you are one of the lucky providers who has not had the pleasure of undergoing a RAC audit and accept Medicare/caid, then you should go buy lottery tickets.

For Medicare providers, the RAC audits have been targeted to only Parts A and B. However, the Center for Medicare and Medicaid Services (CMS) proposes to expand the RAC audits to Medicare Advantage. CMS has published the proposal and seeks comments by February 1, 2016.

I am reminded of the Bubonic Plague from the 14th century.

As these Medicare audits continue to spread nationwide, to more CPT codes, and to more health care services, providers are warned to wash your hands. It is the best way to prevent acquiring a Medicare audit.

So far, there is no indication when the RAC audits for Medicare Advantage will begin. However, remember that RAC auditors are financially incentivized to audit and find errors. Thus, those RAC auditors will be chomping at the bit to get going.

Wouldn’t you if you were  compensated 9-13% of amount found to be owed back to the state?

More to come…