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Medicare Auditors Fail to Follow the Jimmo Settlement
Auditors are not lawyers. Some auditors do not even possess the clinical background of the services they are auditing. In this blog, I am concentrating on the lack of legal licenses. Because the standards to which auditors need to hold providers to are not only found in the Medicare Provider Manuals, regulations, NCDs and LCDs. Oh, no… To add even more spice to the spice cabinet, common law court cases also create and amend Medicare and Medicaid policies.
For example, the Jimmo v. Selebius settlement agreement dictates the standards for skilled nursing and skilled therapy in skilled nursing facilities, home health, and outpatient therapy settings and importantly holds that coverage does not turn on the presence or absence of a beneficiary’s potential for improvement.
The Jimmo settlement dictates that:
“Specifically, in accordance with the settlement agreement, the manual revisions clarify that coverage of skilled nursing and skilled therapy services in the skilled nursing facility (SNF), home health (HH), and outpatient therapy (OPT) settings “…does not turn on the presence or absence of a beneficiary’s potential for improvement, but rather on the beneficiary’s need for skilled care.” Skilled care may be necessary to improve a patient’s current condition, to maintain the patient’s current condition, or to prevent or slow further deterioration of the patient’s condition.”
This Jimmo standard – not requiring a potential for improvement – is essential for diseases that are lifelong and debilitating, like Multiple Sclerosis (“MS”). For beneficiaries suffering from MS, skilled therapy is essential to prevent regression.
I have reviewed numerous audits by UPICs, in particular, which have failed to follow the Jimmo settlement standard and denied 100% of my provider-client’s claims. 100%. All for failure to demonstrate potential for improvement for MS patients. It’s ludicrous until you stop and remember that auditors are not lawyers. This Jimmo standard is found in a settlement agreement from January 2013. While we will win on appeal, it costs providers money valuable money when auditors apply the wrong standards.
The amounts in controversy are generally high due to extrapolations, which is when the UPIC samples a low number of claims, determines an error rate and extrapolates that error rate across the universe. When the error rate is falsely 100%, the extrapolation tends to be high.
While an expectation of improvement could be a reasonable criterion to consider when evaluating, for example, a claim in which the goal of treatment is restoring a prior capability, Medicare policy has long recognized that there may also be specific instances where no improvement is expected but skilled care is, nevertheless, required in order to prevent or slow deterioration and maintain a beneficiary at the maximum practicable level of function. For example, in the regulations at 42 CFR 409.32(c), the level of care criteria for SNF coverage specify that the “. . . restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.” The auditors should understand this and be trained on the proper standards. The Medicare statute and regulations have never supported the imposition of an “Improvement Standard” rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition.
When you are audited by an auditor whether it be a RAC, MAC or UPIC, make sure the auditors are applying the correct standards. Remember, the auditors aren’t attorneys or doctors.
Medicare Appeals: When It Comes To Appealing, Beneficiaries May Be Key!
Today I want to discuss the Medicare appeal process and its faults. Upon undergoing a Medicare audit by Safeguard or whichever auditor contracted by CMS, a provider usually receives a notice of overpayment. The 5-level appeal process is flawed as the first two levels rubber-stamp the findings. After the second level of appeal – the QIC level to the ALJ – recoupment occurs unless the provider set up an extended repayment schedule (ERS) or files for an injunction in federal court based on a taking of a property right; i.e., the right to reimbursement for services rendered.
Everyone deserves to be paid for medically necessary services rendered. The conundrum here is that the circuit courts are split as to the protections a provider deserves.
Whenever a federal injunction is filed, the Defendant auditor files a Motion to Dismiss based on (1) failure to exhaust administrative remedies and that the Medicare Act requires the administrative process; therefore, the federal court has no jurisdiction. The provider will argue that the federal action is ancillary to the substantive issue of whether the overpayment was in error and that its protected property right is being taken without due process.
A new case rendered October 1, 2021, Integrity Social Work Services, LCSW, LLC. V. Azar, 2021 WL 4502620 (E.D.N.Y 2021) straddles the fence on the issues. The EDNY falls within the 2nd circuit, which is undecidedly split. The 5th Circuit is, as well, split. District courts across the country are split on whether Medicare providers have a protected property interest in Medicare payments subject to recoupment. Several courts have found that the Medicare Act does create such a property right, including NC, 4th Circuit, Texas, Florida, Ohio, and Illinois, to name a few.
This provider was accused of an alleged overpayment of about 1 million. It argued that because it will not receive a prompt ALJ hearing that it will be driven out of business. This is a harsh and unacceptable outcome that readily occurs in about half the states. Providers should be aware of which State in which it resides and whether that State upholds a providers’ property interest in reimbursements for services rendered.
The Integrity Social Work Court found that, yes, jurisdiction in federal court was proper because the claims were ancillary to the substantive claims that would be heard by the ALJ. The provider was asking for a temporary stay of the recoupments until an ALJ hearing was concluded. As you read the case, you get false hope on the ruling. In the end, Judge Peggy Kuo found “Nor is the process to contest an overpayment or a recoupment decision arbitrary, outrageous, or even inadequate.”
Respectfully, I disagree. As does half the other courts. See, e.g., Accident, Injury & Rehab., PC v. Azar, No. 4:18-CV-2173 (DCC), 2018 WL 4625791, at *7 (D.S.C. Sept. 27, 2018); Adams EMS, Inc. v. Azar, No. H-18-1443, 2018 WL 3377787, at *4 (S.D. Tex. July 11, 2018); Family Rehab., Inc. v. Azar, No. 3:17-CV-3008-K, 2018 WL 3155911, at *4-5 (N.D. Tex. June 28, 2018). Juxtapose other courts have found that no such property interest exists. See, e.g., Alpha Home Health Solutions, LLC v. Sec’y of United States Dep’t of Health & Human Servs., 340 F. Supp. 3d 1291, 1303 (M.D. Fla. 2018); Sahara Health Care, Inc. v. Azar, 349 F. Supp. 3d 555, 572 (S.D. Tex. 2018); PHHC, LLC v. Azar, No. 1:18-CV-1824, 2018 WL 5754393, at *10 (N.D. Ohio Nov. 2, 2018); In Touch Home Health Agency, Inc. v. Azar, 414 F. Supp. 3d 1177, 1189-90 (N.D. Ill. 2019).
Providers – If you bring a claim to cease the recoupment, also sue on behalf of your Medicare beneficiaries’ property rights to freedom of choice of provider and access to care. Their rights are even stronger than the providers’ rights. I did this in Bader in Indiana and won based on the recipients’ rights.
Medicare Provider Appeals: Premature Recoupment Is Not OK!
A ZPIC audited a client of mine a few years ago and found an alleged overpayment of over $7 million. Prior to them hiring my team, they obtained a preliminary injunction in federal court – like I always preach to do – remember, that between the levels 2 and 3 of a Medicare provider appeal, CMS can recoup the alleged overpayment. This is sheer balderdash; the government should not be able to recoup funds that the provider, most likely, doesn’t owe. But this is the law. I guess we need to petition Congress to change this tomfoolery.
Going back to the case, an injunction stops the premature recoupments, but it does nothing regarding the actual alleged overpayments. In fact, the very reason that you can go to federal court based on an administrative action is because the injunction is ancillary to the merits of the contested case. Otherwise, you would have to exhaust your administrative remedies.
Here, we asserted, the premature recoupments (1) violated its rights to procedural due process, (2) infringed its substantive due-process rights, (3) established an “ultra vires” cause of action, and (4) entitled it to a “preservation of rights” injunction under the Administrative Procedure Act, 5 U.S.C. §§ 704–05. We won the battle, but not the war. To date, we have no date for an administrative law judge (“ALJ”) – or level 3 – hearing on the merits.
For those of you who have participated in a third-level, Medicare provider appeal will know that, many times, no one shows for the other side. The other side being the entity claiming that you owe $7million. For such an outlandish claim of $7 million, would you not think that the side protesting that you owe $7 million would appear and try to prove it? At my most recent ALJ hearing, no one appeared for the government. Literally, my client – a facility in NJ that serves the MS population – me and the ALJ were the only participants. Are the auditors so falsely confident that they believe their audits speaks for itself?
In this particular case, the questionable issue was whether the MS provider’s consumers met the qualifications for the skilled rehabilitation due to no exacerbated physical issues. However, we all know from the Jimmo settlement, that having exacerbated issues or improvement is not a requirement to requiring skilled rehab versus exercising with your spouse. The ALJ actually said – “I cannot believe this issue has gotten this far.” I agree.
TPE and Prepay Audits: Speak Softly, But Carry a Big Stick
Audits have now resumed to 100% capacity – or even 150% capacity. All audits that were suspended during COVID are reinstated. As you all know, RAC and MAC audits were reinstated back in August. CMS announced that Targeted Probe and Educate (TPE) audits would resume on Sept. 1, 2021. Unlike RAC audits, the stated goal of TPE audits is to help providers reduce claim denials and appeals with one-on-one education, focused on the documentation and coding of the services they provide. However, do not let the stated mission fool you. Failing a TPE audit can result in onerous actions such as 100 percent prepay review, extrapolation, referral to a RAC, or other action, a carefully crafted response to a TPE audit is critical. TPEs can be prepay or post-pay.
Speaking of prepayments, these bad babies are back in full swing. CareSource is one of the companies contracted with CMS to conduct prepayment reviews and urgent care centers seem to be a target. Prepayment review is technically and legally not a penalty; therefore being placed on prepayment review is not appealable. But do not believe these legalities – prepay is Draconian in nature and puts many providers out of business, especially if they fail to seek legal counsel immediately and believe that they will pass without any problem. When it comes to prepay, believing that everything will be ok, is a death trap. Instead get a big stick.
42 CFR §447.45 requires 90% of clean claims to be paid to a provider within 30 days of receipt. 99% must be paid within 90 days. The same regulations mandate the agency to conduct prepayment review of claims to ensure that the claims are not duplicative, the consumer is eligible for Medicare, or that the number of visits and services delivered are logically consistent with the beneficiary’s characteristics and circumstances, such as type of illness, age, sex, and service location. This standard prepayment review is dissimilar from a true prepayment review.
Chapter 3 of the Medicare Program Integrity Manual lays out the rules for a prepayment review audit. The Manual states that MACs shall deal with serious problems using the most substantial administrative actions available, such as 100 percent prepayment review of claims. Minor or isolated inappropriate billing shall be remediated through provider notification or feedback with reevaluation after notification. The new prepay review rules comments closed 9/13/21, so it will take effect soon.
If a 100% prepay is considered the most substantial administrative action, then why is it not considered an appealable sanction? I have, however, been successful in obtaining an injunction enjoining the suspension of payments without appealing being placed on prepay.
When requesting documentation for prepayment review, the MACs and UPICs shall notify providers when they expect documentation to be received. It is normally 30-days. The Manual does not allow for time extensions to providers who need more time to comply with the request. Reviewers shall deny claims when the requested documentation to support payment is not received by the expected timeframe. Any audit, but especially prepay audits can lead to termination under 42 CFR §424.535. You may choose to speak softly, but always carry a big stick.
Audits Surge with Medicare Advantage and TPE Audits Increased!
Everyone knows about audits of health care providers. But what about the billing companies? Or a data-analytics company? In a complaint filed last week, a New York data-mining company DxID is accused of allegedly helping a Medicare Advantage program game federal billing regulations in a way that enabled the plan to overcharge for patient treatment. As you know, Medicare Advantage plans are paid more for sicker patients. Supposedly, DxID combed medical records for “missed” diagnoses. For example, adding major depression to an otherwise happy consumer. A few years ago, I won an injunction for a provider who 100% relied on the billing company to bill. Because this company aggressively upcoded, we used the victims’ rights statutes in the SSA to defend the provider. And it worked. Providers often forget about the safety net found in the victims’ rights statutes if they wholly rely on a billing company.
This DXID complaint cites medical conditions that it says either were exaggerated or weren’t supported by the medical records, such as billing for treating allegedly unsupported claims for renal failure, the most severe form of chronic kidney disease. The Justice Department is seeking treble damages in the False Claims Act suit, plus an unspecified civil penalty for each violation of the law.
Medicare Advantage has been the target of multiple government investigations, Justice Department and whistleblower lawsuits and Medicare audits. One 2020 report estimated improper payments to the plans topped $16 billion the previous year. In July, the Justice Department consolidated six such cases against Kaiser Permanente health plans. In August, California-based Sutter Health agreed to pay $90 million to settle a similar fraud case. Previous settlements have totaled more than $300 million.
Breaking news: Targeted Probe and Educate audits (TPE) resumed September 1, 2021. Due to COVID, TPE audits had been suspended. Unlike recovery audits, the stated goal of TPE audits is to help providers reduce claim denials and appeals with one-on-one education focused on the documentation and coding of the services they provide. TPE audits are conducted by MACs. While originally limited in scope to hospital inpatient admissions and home health claims, CMS expanded the program to allow MACs to perform TPE audits of all Medicare providers for all items and services billed to Medicare. Beware the TPE audits; they are not as friendly as they purport. A TPE audit can result in a 100 percent prepay review, extrapolation, referral to a Recovery Auditor, or other action, so a carefully crafted response to a TPE audit is critical.
The TPE audit process begins when a provider receives a “Notice of Review” letter from the MAC which states the reasons the provider has been selected for review and requests 20-40 records be produced. Once the records are produced, the MAC will review the 20-40 claims against the supporting medical records and send the provider a letter detailing the results of their review. If the claims are found to be compliant, the TPE audit ends and the provider cannot be selected for review again for a year unless the MAC detects significant changes in provider billing. However, if the claims are found not to be compliant, the MAC will invite the provider to a one-on-one education session specific to the provider’s documentation and coding practices. The provider is then given 45 days to make changes and a second round of 20-40 records will be requested with dates of service no earlier than 45 days after the one-on-one education.
The provider will be given three rounds of TPE to pass. Do not use all three rounds; get it right the first time. If the provider fails pass after three rounds, they will be referred to CMS for further action. With MA, TPE, and audits of data-analytics companies ramping up, 2022 is going to be an audit frenzy.
A Decline in Home Health and Long Term Care Providers
Hello and Happy birthday Medicare and Medicaid. You are now 56 years old. Medicaid was never supposed to be long-lasting or a primary insurance that it has become. Over 81 million citizens rely on Medicaid. President Lyndon Johnson signed both landmark social programs into law on July 30, 1965.
I have two newsflashes to discuss today. (1) Nursing homes will be targeted by audits because few surveys occurred during COVID, according to a newly published OIG Report; and (2) long-term care facilities, in general, are decreasing in number while the need escalates.
First, the OIG, Addendum to OEI-01-20-00430, published July 2021, “States’ Backlogs of Standard Surveys of Nursing Homes Grew Substantially During the COVID-19 Pandemic,” which is an audit of a mass number of nursing homes across the country.
Nationally, 71 percent of nursing homes (10,913 of 15,295) had gone at least 16 months without a standard survey as of May 31, 2021. By State, the backlogs for standard surveys ranged from 22 percent to 96 percent of nursing homes. Expect a surge of standard audits.
Insert chart.
Second, enrollment in fee-for-service (FFS) Medicare and Medicaid has skyrocketed in recent years, especially due to COVID and longer life-expectancies. This equates to more consumers. It means a need for more providers willing to accept the low reimbursement rates offered by Medicare and Medicaid. More providers plus more consumers equals more RAC and MAC audits. Medicare remains the nation’s largest single purchaser of health care, with home health care services accounting for a decent chunk of spending. Of the $3.2 trillion spent on personal health care in 2019, Medicare accounted for 23% — or $743 billion — of that total.
There were 11,456 home health agencies operating in 2020. That total is down slightly compared to the 11,571 agencies operating in 2019. The number of home health agencies has actually been declining since 2013. Before that, the industry had experienced several years of substantial growth in terms of new agencies opening. The decline in agencies has been most concentrated in Texas and Florida. The number of skilled nursing facilities (SNFs) is also decreasing, though not quite as fast.
My humble opinion? The government needs to be more aware of how aggressive Medicare and Medicaid auditors are. How overzealous. Congress needs to pass legislation to protect the providers who accept Medicare and Medicaid. Like the military, we should be saying, “thank you for your service.”
“Reverse RAC Audits”: Increase Revenue by Protecting Your Consumers
Today I want to talk about two ways to increase revenue merely by ensuring that your patients’ rights are met. We talk about providers being audited for their claims being regulatory compliant, but how about self-audits to increase your revenue? I like these kind of audits! I am calling these audits “Reverse RAC audits”. Let’s bring money in instead of reimbursements recouped.
You can protect yourself as a provider and increase revenue by remembering and litigating on behalf of your consumers’ rights. Plus, your patients will be eternally grateful for your advocacy. It is a win/win. The following are two, distinct ways to increase revenue and protect your consumers’ rights:
- Ensuring freedom of choice of provider; and
- Appealing denials on behalf of your consumers.
Freedom of choice of provider.
In a federal case in Indiana, we won an injunction based on the patients’ rights to access to care.
42 CFR § 431.51 – Free choice of providers states that “(b) State plan requirements. A State plan must provide as follows…:
(1) A beneficiary may obtain Medicaid services from any institution, agency, pharmacy, person, or organization that is –
(i) Qualified to furnish the services; and
(ii) Willing to furnish them to that particular beneficiary.
In Bader v. Wernert, MD, we successfully obtained an injunction enjoining the State of Indiana from terminating a health care facility. We sued on behalf of a geneticist – Dr. Bader – whose facility’s contract was terminated from the Medicaid program for cause. We sued Dr. Wernert in his official capacity as Secretary of the Indiana Family and Social Services Administration. Through litigation, we saved the facility’s Medicaid contract from being terminated based on the rights of the consumers. The consumers’ rights can come to the aid of the provider.
Keep in mind that some States’ Waivers for Medicaid include exceptions and limitations to the qualified and willing provider standard. There are also limits to waiving the freedom of choice of provider, as well.
Appealing consumers’ denials.
This is kind of a reverse RAC Audit. This is an easy way to increase revenue.
Under 42 CFR § 405.910 – Appointed representatives, a provider of services may appeal on behalf of the consumers. If you appeal on behalf of your consumers, the obvious benefit is that you could get reimbursed for the services rendered that were denied. You cannot charge a fee for the service; however, so please keep this in mind.
One of my clients currently has hired my team appealing all denials that are still viable under the statute of limitations. There are literally hundreds of denials.
Over the past few years, they had hundreds of consumers’ coverage get denied for one reason or the other. Allegedly not medically necessary or provider’s trainings weren’t conveyed to the auditors. In other words, most of the denials are egregiously wrong. Others are closer to call. Regardless these funds were all a huge lump of accounts’ receivables that was weighing down the accounting books.
Now, with the help of my team, little by little, claim by claim, we are chipping away at that accounts’ receivables. The receivables are decreasing just by appealing the consumers’ denials.
Increased Medicare Reimbursements and Nursing Home Audits
HEAR YE, HEAR YE: Medicare reimbursement rate increase!!
On April 27th, CMS proposed a rule to increase Medicare fee-for-service payment rates and policies for inpatient hospitals and long-term care hospitals for fiscal year (FY) 2022. The proposed rule will update Medicare payment policies and rates for operating and capital‑related costs of acute care hospitals and for certain hospitals. The proposed increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (“IQR”) Program and are meaningful electronic health record (“EHR”) users is approximately 2.8%. This reflects the projected hospital market basket update of 2.5% reduced by a 0.2 percentage point productivity adjustment and increased by a 0.5 percentage point adjustment required by legislation.
Secondly, a sample audit of nursing homes conducted by CMS will lead to more scrutiny of nursing homes and long-term care facilities. The sample audit showed that two-thirds of Massachusetts’s nursing homes that receive federal Medicaid and Medicare funding are lagging in required annual inspections — and MA is demonstrative of the country.
237 nursing homes and long-term care facilities in the state, or 63.7% of the total, are behind on their federal health and safety inspections by at least 18 months. The national average is 51.3%.
We cannot blame COVID for everything. Those inspections lagged even before the pandemic, the data shows, but ground to a halt last year when the federal agency discontinued in-person visits to nursing homes as they were closed off to the public to help prevent spread of the COVID.
Lastly, on April 29, 2021, CMS issued a final rule to extend and make changes to the Comprehensive Care for Joint Replacement (“CJR”) model. You’ve probably heard Dr. Ron Hirsch reporting on the joint replacement model on RACMonitor. The CJR model aims to pay providers based on total episodes of care for hip and knee replacements to curb costs and improve quality. Hospitals in the model that meet spending and quality thresholds can get an additional Medicare payment. But hospitals that don’t meet targets must repay Medicare for a portion of their spending.
This final rule revises the episode definition, payment methodology, and makes other modifications to the model to adapt the CJR model to changes in practice and fee-for-service payment occurring over the past several years. The changes in practice and payment are expected to limit or reverse early evaluation results demonstrating the CJR model’s ability to achieve savings while sustaining quality. This rule provides the time needed to test modifications to the model by extending the CJR model for an additional three performance years through December 31, 2024 for certain participant hospitals.
The CJR model has proven successful according to CMS. It began in 2016. Hospitals had a “statistically significant decrease” in average payments for all hip and knee replacements relative to a control group. $61.6 million (a savings of 2% of the baseline)
Medicare Auditors Fail to Follow the Jimmo Settlement
Auditors are not lawyers. Some auditors do not even possess the clinical background of the services they are auditing. In this blog, I am concentrating on the lack of legal licenses. Because the standards to which auditors need to hold providers to are not only found in the Medicare Provider Manuals, regulations, NCDs and LCDs. Oh, no… To add even more spice to the spice cabinet, common law court cases also create and amend Medicare and Medicaid policies.
For example, the Jimmo v. Selebius settlement agreement dictates the standards for skilled nursing and skilled therapy in skilled nursing facilities, home health, and outpatient therapy settings and importantly holds that coverage does not turn on the presence or absence of a beneficiary’s potential for improvement.
The Jimmo settlement dictates that:
“Specifically, in accordance with the settlement agreement, the manual revisions clarify that coverage of skilled nursing and skilled therapy services in the skilled nursing facility (SNF), home health (HH), and outpatient therapy (OPT) settings “…does not turn on the presence or absence of a beneficiary’s potential for improvement, but rather on the beneficiary’s need for skilled care.” Skilled care may be necessary to improve a patient’s current condition, to maintain the patient’s current condition, or to prevent or slow further deterioration of the patient’s condition.”
This Jimmo standard – not requiring a potential for improvement – is essential for diseases that are lifelong and debilitating, like Multiple Sclerosis (“MS”). For beneficiaries suffering from MS, skilled therapy is essential to prevent regression.
I have reviewed numerous audits by UPICs, in particular, which have failed to follow the Jimmo settlement standard and denied 100% of my provider-client’s claims. 100%. All for failure to demonstrate potential for improvement for MS patients. It’s ludicrous until you stop and remember that auditors are not lawyers. This Jimmo standard is found in a settlement agreement from January 2013. While we will win on appeal, it costs providers money valuable money when auditors apply the wrong standards.
The amounts in controversy are generally high due to extrapolations, which is when the UPIC samples a low number of claims, determines an error rate and extrapolates that error rate across the universe. When the error rate is falsely 100%, the extrapolation tends to be high.
While an expectation of improvement could be a reasonable criterion to consider when evaluating, for example, a claim in which the goal of treatment is restoring a prior capability, Medicare policy has long recognized that there may also be specific instances where no improvement is expected but skilled care is, nevertheless, required in order to prevent or slow deterioration and maintain a beneficiary at the maximum practicable level of function. For example, in the regulations at 42 CFR 409.32(c), the level of care criteria for SNF coverage specify that the “. . . restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.” The auditors should understand this and be trained on the proper standards. The Medicare statute and regulations have never supported the imposition of an “Improvement Standard” rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition.
When you are audited by an auditor whether it be a RAC, MAC or UPIC, make sure the auditors are applying the correct standards. Remember, the auditors aren’t attorneys or doctors.
Premature Recoupment of Medicare Reimbursements Defies Due Process!
Who knows that – regardless your innocence –the government can and will recoup your funds preemptively at the third level of Medicare appeals. This flies in the face of the elements of due process. However, courts have ruled that the redetermination and the reconsideration levels afford the providers enough due process, which entails notice and an opportunity to be heard. I am here to tell you – that is horse manure. The first two levels of a Medicare appeal are hoops to jump through in order to get to an independent tribunal – the administrative law judge (“ALJ”). The odds of winning at the 1st or 2nd level Medicare appeal is next to zilch, although often you can get the alleged amount reduced. The first level is before the same entity that found you owe the money. Auditors are normally not keen on overturning themselves. The second level is little better. The first time that you present to an independent tribunal is at the third level.
Between 2009 and 2014, the number of ALJ appeals increased more than 1,200 percent. And the government recoups all alleged overpayments before you ever get before an ALJ.
In a recent case, Sahara Health Care, Inc. v. Azar, 975 F.3d 523 (5th Cir. 2020), a home health care provider brought an action against Secretary of Department of Health and Human Services (“HHS”) and Administrator for the Centers for Medicare and Medicaid Services (“CMS”), asserting that its statutory and due process rights were violated and that defendants acted ultra vires by recouping approximately $2.4 million in Medicare overpayments without providing a timely ALJ hearing. HHS moved to dismiss, and the provider moved to amend, for a temporary restraining order (“TRO”) and preliminary injunction, and for an expedited hearing.
The case was thrown out, concluding that adequate process had been provided and that defendants had not exceeded statutory authority, and denied provider’s motion for injunctive relief and to amend. The provider appealed and lost again.
What’s the law?
Congress prohibited HHS from recouping payments during the first two stages of administrative review. 42 U.S.C. § 1395ff(f)(2)(A).
If repayment of an overpayment would constitute an “extreme hardship, as determined by the Secretary,” the agency “shall enter into a plan with the provider” for repayment “over a period of at least 60 months but … not longer than 5 years.” 42 U.S.C. § 1395ddd(f)(1)(A). That hardship safety valve has some exceptions that work against insolvent providers. If “the Secretary has reason to believe that the provider of services or supplier may file for bankruptcy or otherwise cease to do business or discontinue participation” in the Medicare program, then the extended repayment plan is off the table. 42 U.S.C. § 1395ddd(f)(1)(C)(i). A provider that ultimately succeeds in overturning an overpayment determination receives the wrongfully recouped payments with interest. 42 U.S.C. § 1395ddd(f)(2)(B). The government’s interest rate is high. If you do have to pay back the alleged overpayment prematurely, the silver lining is that you may receive extra money for your troubles.
The years-long back log, however, may dwindle. The agency has received a funding increase, and currently expects to clear the backlog by 2022. In fact, the Secretary is under a Mandamus Order requiring such a timetable.
A caveat regarding this grim news. This was in the Fifth Circuit. Other Courts disagree. The Fourth Circuit has held that providers do have property interests in Medicare reimbursements owed for services rendered, which is the correct holding. Of course, you have a property interest in your own money. An allegation of wrongdoing does not erase that property interest. The Fourth Circuit agrees with me.
