Hospice Obtains Restraining Order Against CMS For Medicare Administrative Appeal Backlog
November 13, 2015 01:44 PM
A hospice provider in Savannah, Georgia, recently took the government to federal court, challenging the interminable backlog in the Medicare administrative appeals process. Faced with millions of dollars in proposed recoupments that would have forced it out of business, the hospice provider sued the Centers for Medicare and Medicaid Services (CMS) in federal court and obtained a temporary restraining order prohibiting the government from recouping alleged overpayments while the provider pursued its administrative appeal rights. Following an evidentiary hearing on additional injunctive relief, CMS agreed to settle the case and stay recoupment until after the provider’s administrative appeal rights are exhausted.
Like many providers, Hospice Savannah found itself subjected to a Zone Program Integrity Contractor (ZPIC) audit. Despite Hospice Savannah’s stellar, objective performance metrics, the ZPIC sought to impose adjustments on a handful of claims and then use statistics to extrapolate those adjustments across the provider’s universe of claims. Filing administrative appeals, Hospice Savannah challenged the attempted adjustments, as well as the statistical extrapolation, which was based on an untested methodology that has not been peer reviewed by statistical experts.
At the initial levels of the administrative appeal, Hospice Savannah was able to stay the government’s efforts to recoup the alleged overpayment against current Medicare receivables. Unfortunately, at the very step of the appeals process where providers are most successful, the Administrative Law Judge (ALJ) level, CMS’ regulations allow it to begin recoupments. While allowing recoupment may have been reasonable when the laws were enacted and when the ALJs were to issue their decisions within 90 days, the ALJs now have a backlog of claims that could delay a decision for over five years. As with many hospices, Medicare payments represented approximately 80% of the hospice’s overall revenues. Immediate recoupment of 100% of its Medicare payments would have been immediately crippling.
Beyond the harm to the hospice, its patients and employees would have been harmed. Its terminally-ill patients and family members, most of whom are elderly and disabled, would have been particularly adversely affected by the closure. They would need to find new hospice providers and would then need to become acclimated to new caregivers. It was doubtful that the other hospice providers in the area would have been able to accommodate all of the hospice’s patients. As a result, patients may have been forced to leave their families and community and be placed elsewhere in the state or go without the hospice care that they had chosen and that their attending physicians had certified that they needed. The hospice had patients who were receiving care in its inpatient hospice facility (the only one in the area) and who would have needed to be transferred to another non-hospice inpatient facility, most likely a nursing home. Because of the backlog and delay in obtaining an ALJ Hearing, all of this catastrophic and irreparable harm would have occurred before the hospice received its first opportunity for full and fair review by an independent party, and even though such review results in reversals of the claim denials approximately 70% of the time.
Armed with the facts above, the hospice filed a Complaint and a Motion for Temporary Restraining Order in federal court seeking to prevent recoupment pending completion of the administrative review procedures, including the ALJ Hearing. The hospice argued, among other things, that the review process the hospice had received up to that point was so systemically flawed that it was constitutionally insufficient. The Court granted a Temporary Restraining Order, which temporarily prevented any recoupment and set the matter for a hearing on the hospice’s motion for a preliminary injunction.
At the hearing on the preliminary injunction, the hospice was able to show that it had not received sufficient procedural due process to protect it from an erroneous deprivation of its property. The hospice was able to demonstrate through government reports that the only pre-recoupment administrative review that it had received up to that point was so systemically flawed that approximately 70% of the overpayment determinations that remain after these reviews are reversed at the next level of review. In addition, it showed that the overpayment determinations, as well as the statistical methodology used, were likely to be reversed in an ALJ hearing. The hospice showed that, due to the backlog of ALJ appeals, it would not receive an ALJ decision within 90 days of request as required by statute, but would instead be forced to wait at least three to five years for a decision. Finally, it demonstrated the catastrophic harm that would result to the hospice if recoupment were allowed to proceed as well as the harm to the hospice’s patients and the community at large if the hospice were forced to close.
At the close of the hearing, the Court implored all parties to consider a resolution that would permit the hospice to remain open and continue to operate while it pursued its administrative appeals. Ultimately, CMS agreed to a significantly reduced payment schedule that was more reflective of the likelihood that the underlying overpayment determinations would be reversed and, most importantly, that was sufficiently manageable for the hospice to allow it to continue to deliver high-quality services to its hospice patients while it awaits its ALJ hearing.
Jason Bring and Jerad Rissler of Arnall Golden Gregory LLP represented the hospice provider in the federal court action seeking injunctive relief and represent the hospice in the pending administrative appeals.