“Get thee to a nunnery!” screamed Hamlet to Ophelia in frustration of his mother marrying Claudius so quickly after his father’s death. Similarly any provider who has undergone a Medicare appeal understands the frustration of getting the appeal to the administrative law judge level (the 3rd level). It takes years to do so, and it is the imperative step instead of the lower level rubber stamps. “Get thee to an ALJ!”
Per regulation, once you appeal an alleged Medicare overpayment, no recoupment of the disputed funds occurs until after you receive the second level review, which is usually the QIC upholding the overpayment. It is no secret that the Medicare provider appeals’ level one and two are basically an automatic approval process of the decision to recoup. “Something is rotten in the state of Denmark.” Hence, the importance of the ALJ level.
There are 5 levels of Medicare appeals available to providers:
- Administrative Law Judge (ALJ)
- Departmental Appeals Board (DAB) Review
- Federal Court (Judicial) Review
The third level is the level in which you present your case to an ALJ, who is an impartial independent tribunal. Unfortunately, right now, it takes about five years between levels two and three, although with CMS hiring 70 new ALJs, the Office of Medicare Hearings and Appeals (OMHA) is optimistic that the backlog will quickly dissipate. Last week, I attended an ALJ hearing for a client based on an audit conducted in 2016. Five years later, we finally presented to the ALJ. When the ALJ was presented with our evidence which clearly demonstrated that the provider should not pay anything, he actually said, “I’m shocked this issue got this far.” As in, this should have been reversed before this level. “O what a noble mind is here o’erthrown!”
In many cases, a premature recoupment of funds in dispute will financially destroy the health care provider, which should not be the purpose of any overpayment nor the consequence of any fraud, waste, and abuse program. We are talking about documentation nit-picking. Not fraud. Such as services notes signed late, according to best practices. Or quibbles about medical necessity or the definition of in patient and the two-midnight rule.
You have all probably read my blogs about the Family Rehab case that came out in TX in 2019. A Court found that Family Rehab, a health care facility, which faced a $7 million alleged overpayment required an injunction. The Judge Ordered that CMS be enjoined from prematurely recouping Medicare reimbursements from Family Rehab. Now, be mindful, the Judge did not enjoin CMS the first time Family Rehab requested an injunction; Superior Court initially dismissed the case for lack of jurisdiction based on failure to exhaust its administrative remedies. But instead of giving up, which is what most providers would do when faced with a dismissed injunction request due to emotional turmoil and finances. “To be, or not to be: that is the question:” Instead, Family Rehab appealed the dismissal to the Court of Appeals and won. The 5th Circuit held that Superior Court does have jurisdiction to hear a collateral challenge on both procedural due process grounds as well as an ultra vires action. On remand, Family Rehab successfully obtained a permanent injunction.
The clinical issues supposedly in support of the overpayment are silly. In Family Rehab’s case, the ZPIC claims homebound criteria was not met when it is clearly met by a reasonable review of the documents.
Homebound is defined as:
The patient must either:
- Because of illness or injury, need the aid of supportive devices such as crutches, canes, wheelchairs, and walkers; the use of special transportation; or the assistance of another person in order to leave their place of residence
- Have a condition such that leaving his or her home is medically contraindicated.
If the patient meets one of the Criteria One conditions, then the patient must ALSO meet two additional requirements in Criteria Two below:
- There must exist a normal inability to leave home;
- Leaving home must require a considerable and taxing effort.
In one of the claims that the ZPIC found no homebound status, the consumer was legally blind and in a wheelchair! The injunction hinged on the Court’s finding that because the ALJ stage is critical in decreasing the risk of erroneous deprivation, an injunction was necessary. I look forward to the ALJ hearing. “The rest is silence.”
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.