Supreme Court to decide how late is too late on Medicare pay appeals

Several hospitals argue they have the right to file appeals after the deadline because of incorrect payment information from the federal government.

By — Posted Dec. 17, 2012

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The U.S. Supreme Court is weighing whether health professionals can fight for higher Medicare payments if they discover they were shortchanged after the statutory deadline to appeal. The outcome of oral arguments, heard Dec. 4, will determine if “equitable tolling,” which allows courts to waive a deadline in extraordinary circumstances, applies in the case.

If the high court bans health professionals from appealing claims after the 180-day deadline, the ruling would discourage fairness in Medicare billing, said Brian M. Daucher, a California-based attorney with Sheppard Mullin Richter & Hampton LLP. He wrote a friend-of-the-court brief for a group of hospice facilities in support of allowing late appeals.

“There's a wide diversity of providers that are affected by this” case, Daucher said. “If the Supreme Court says equitable tolling is not available to Medicare providers, this affects everybody that submits a Medicare bill — hospitals, doctors, every type of Medicare provider. It sets up an imbalance of power that is pretty dramatic.”

The case originates from how the Centers for Medicare & Medicaid Services calculated payments for disproportionate share hospitals before 2008. DSHs are medical centers that receive a higher level of pay because they treat more low-income patients who have trouble paying their bills.

In 2008, a federal court ruled that the formula Medicare contractors were using to calculate DSH payments was too low. Judges ordered CMS to start calculating payments with a new formula that would result in higher, fairer payments.

After the ruling, a number of hospitals, hospices and medical centers attempted to appeal past Medicare payments, but CMS said it was too late. Under Medicare law, health professionals have only 180 days to appeal. A group of hospitals, led by Auburn Regional Medical Center in Washington state, sued.

The plaintiffs said hospitals have the right to appeal late because of incorrect payment calculations by CMS. The Dept. of Health and Human Services argued that only Congress, not the courts, could modify the 180-day deadline.

A district court ruled for HHS, saying the deadline could not be waived. However, the U.S. Court of Appeals for the District of Columbia Circuit reversed that decision in 2011, and HHS appealed to the Supreme Court.

The Dept. of Justice and Robert Roth, an attorney for the hospitals, declined to comment.

Justices question case arguments

During oral arguments before the high court, Justice Dept. attorney Edwin S. Kneedler said the appeals court was wrong to disregard the deadline.

“We believe the sort of open-ended equitable tolling that the court of appeals has imposed on this program for the first time in 40 years is fundamentally inconsistent with a need for repose, especially given the sophisticated nature of these providers,” he said.

However, Justice Samuel Alito Jr. questioned Kneedler's stance, asking how health professionals could have known before the deadline that their payments were incorrectly calculated.

“You refer to … the providers as sophisticated, and that certainly is true, but are they really in a position to double-check the calculation if [it's] true that information needed to make the calculation was intentionally withheld [and] concealed?” Alito asked.

Roth argued the ability to impose a mandatory appeals deadline should end when HHS intentionally hides information that could have led to earlier appeals. But Justice Ruth Bader Ginsburg said HHS actions were never proven to be intentional.

“The record that we have says that the CMS failed to use the best available data. It doesn't say anything about deliberate concealment,” she said.

Justice Elena Kagan noted that both parties' arguments were somewhat sound and that no easy answer appeared to exist.

“This all comes down to congressional intent, how we read this statute,” she said. Perhaps “Mr. Kneedler is right that the statute is just ambiguous and that it can be read a bunch of different ways and both of you have presented good arguments. But in the end it really all goes to show that there is a lack of clarity here.”

Complex issues to parse

The justices did not appear to have a strong grasp on how the appeals process works, said Michigan-based attorney Kenneth R. Marcus, who read the argument transcripts. Marcus specializes in Medicare and Medicaid payment appeals issues.

For instance, the justices seemed to confuse the 180-day appeals deadline with a separate three-year “good cause” deadline for reopening Medicare claims for reconsiderations or audits, he said. HHS has a regulation that allows certain reconsiderations to proceed if they are launched within three years of an initial payment. However, HHS must confirm there was good cause to reopen the claim.

“There were two different, separate concepts that were mixed together,” Marcus said. “The two concepts got scrambled in the minds of the justices.”

The case comes down to fairness and assuring that Medicare program decisions are subject to court oversight, said Maureen Mudron, deputy general counsel for the American Hospital Assn., which issued a friend-of-the-court brief in support of the hospitals.

If allowed to stand, “the government's position will impose an enormous financial and administrative burden on hospitals,” she said. “The availability of equitable tolling encourages CMS to craft more evenhanded rules so that providers have the opportunity to obtain relief from the agency's errors.”

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External links

Kathleen Sebelius, Secretary of Health and Human Services, v. Auburn Regional Medical Center, et al., Dec. 4, U.S. Supreme Court oral arguments (link)

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