Resources

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

CLIENT ALERT: Prohibition on Recoupment Prior to Exhaustion of Administrative Remedies

Client Alert
May 18, 2018

In April, the Fifth Circuit Court of Appeals, in Family Rehabilitation, Inc. v. Azar No. 17-11337 (5th Cir. 2018), held that district courts are authorized to enjoin the Centers of Medicare & Medicaid Services (“CMS”) and its contractors from recouping alleged overpayments prior to the completion of the administrative appeal process.

As many people who routinely handle government claim appeals know, recoupment on the alleged overpayment cannot be stayed after a decision is rendered at the reconsideration level (Level 2). Meaning, recoupment can begin while three (3) additional stages of appeal remain to be exhausted. See MLN Matter Number: MM6183, as revised.  This rule significantly impacts providers subject to recoupment because it often takes three (3) to five (5) years before the Administrative Law Judge (“ALJ”) (Level 3) renders a decision on appeal.  Meaning, if the claims were correctly billed, the government will have already recouped the reimbursement on the claims by the time the case presents itself to the ALJ.

For many providers, including Family Rehabilitation, Inc., by the time the ALJ renders a decision, the negative impact of the recoupment will have significantly affected the operation budget of the practice. This may result in a practice or provider closing the business and/or filing for bankruptcy before the final decision on the overpayment is ultimately rendered.

The potential impact on providers from the ALJ’s backlog preventing timely decisions on appeal is demonstrated from Family Rehabilitation, Inc.’s allegations. Family Rehabilitation, Inc. is a provider in Texas that receives approximately 94% of its revenue from Medicare claims. In 2016, the Zone Program Integrity Contractor (“ZPIC”) audited claims and determined that Family Rehabilitation, Inc. had been overpaid on 93% of the 43 claims submitted for review.  The ZPIC extrapolated this amount and rendered an ultimate overpayment decision of $7.89 million. Family Rehabilitation, Inc. timely appealed to the Medicare Administrative Contractor (“MAC”), which denied the request for redetermination, and the request for reconsideration was subsequently denied. This outcome at the first two levels of appeal is not uncommon as contractors are routinely paid based on the amount of overpayments that they determine.

Thereafter, Family Rehabilitation, Inc. timely appealed the denials to the Administrative Law Judge who, because of an enormous backlog of appealed claims, determined that it would be at least three (3) to (5) years before Family Rehabilitation, Inc.’s appeal could be heard and decided. In the interim, Medicare was authorized to begin recoupment on the $7.89 million, essentially preventing any payment to Family Rehabilitation, Inc. by Medicare.

By the time the ALJ would hear the case and render a decision, Family Rehabilitation, Inc. would likely be bankrupt or shutdown because of the lack of payments from Medicare. Therefore, Family Rehabilitation, Inc. filed for a restraining order and preliminary injunction. The District Court for the N.D. of Texas decided that it did not have jurisdiction to hear the case because Family Rehabilitation, Inc. did not yet exhaust its administrative remedies, which would take at least another three (3) to five (5) years.

On appeal, the Fifth Circuit decided that Family Rehabilitation, Inc. could proceed with its motion for injunctive relief, staying the overpayment recoupment, under the “collateral-claim” judicial exception, ultimately waiving the requirement to exhaust administrative remedies.

Although the Fifth Circuit’s decision does not require the District Court to grant the injunctive relief on overpayment recovery,[1] this decision does give providers a path to seek injunctive relief while they wait for their claims to be heard by the ALJ. If injunctive relief is granted, it may stop the recoupment of claims while appeals are pending before the ALJ.

If you are a provider or practice facing recoupment while your claims are stalled in the administrative appeal process, please contact us, and we discuss your options for appeal and to apply for injunctive relief to enjoin further recoupment efforts.

Should you have any questions concerning the recoupment process and the administrative appeal process in general, please contact Amanda L. Waesch, Esq. (alwaesch@bmdllc.com) or Bryan E. Meek, Esq. (bmeek@bmdllc.com), who are attorneys in Brennan, Manna & Diamond’s Provider Relations, Audits, and Appeals Unit, a division of BMD’s Healthcare Department.

 

[1] As of May 18, 2018, the U.S. District Court for the N.D. of Texas has yet to rule on Family Rehabilitation, Inc.’s Motion for Temporary Restraining Order and Injunctive Relief.

Health LawHealthcareAmanda L. Waesch
Client Alert

Interim Final Rule for Surprise Billing

July 12, 2021In an effort to implement the new bipartisan No Surprises Act, on July 1, 2021, the Department of Health and Human Services (HHS), along with the Departments of Labor and Treasury, issued an interim final rule to safeguard patients against unforeseen medical bills arising from out-of-network care.Client Alert

President Biden Seeks to Limit Non-Compete Agreements

July 8, 2021Today, President Biden announced he would issue an Executive Order that calls on the Federal Trade Commission (FTC) to adopt rules to curtail worker non-compete agreements. Interestingly, a week ago, the FTC approved changes to its Rules of Practice to modernize and expedite the way it issues Trade Regulation Rules. If you have followed our alerts, we predicted the elimination of non-competes would probably happen. In 2016, then-Vice President Biden was a vocal opponent against non-compete agreements. He led the Obama administration’s initiative seeking to limit or eliminate non-compete agreements. In his presidential campaign, Biden promised to “work with Congress to eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a narrowly defined category of trade secrets . . ..”Client Alert

New NIL Opportunities for Student-Athletes Require Diligent Review

July 8, 2021On June 28, 2021, Governor Mike DeWine signed Executive Order 2021-10D, “Establishing the Duties of Colleges and Universities as to Name, Image, and Likeness Compensation of Student-Athletes.” The Executive Order was motivated by the passage of similar name, image, and likeness (“NIL”) regulations in seventeen (17) other states; Ohio followed suit to avoid a significant competitive disadvantage in attracting student-athletes to the state.Client Alert

Tax Savings Potentially on the Chopping Block under President Biden’s American Jobs Plan and American Families Plan

June 18, 2021Recently, President Biden has proposed several tax law changes in his American Jobs Plan and American Families Plan. Outlined below, are a few of the tax savings that could be significantly changed or eliminated under Biden’s plans.Client Alert

Here are the Final Candidates for Mayor of Cleveland

June 17, 2021Earlier this year, current Cleveland Mayor, Frank Jackson, announced he would not run for re-election this fall. With no need to beat an incumbent, the Cleveland mayoral race suddenly became competitive. Thirteen individuals declared their intent to run for mayor. The City of Cleveland, however, has a difficult qualification requirement to run: 3,000 valid signatures from Cleveland residents. The deadline to file a petition to run, with the 3,000 valid signatures, had to be submitted by June 16 (yesterday).
Older posts
Newer posts