Home Health & Hospice Week

HHS loses suit but sets payback amount.

A recent court case offers good news and bad news for suppliers tired of jumping through bureaucratic hoops to prove medical necessity.
 
The good news: A federal judge this month made a final ruling in a case filed in 1999 by Redding, CA DME supplier Maximum Comfort Inc. The ruling confirmed that the certificate of medical necessity should constitute sufficient proof for Medicare reimbursement.
 
On March 7, Judge Lawrence Karlton of the Eastern District of California issued an order reiterating his preliminary ruling from last year in Maximum Comfort v. Tommy Thompson (see Eli's HCW, Vol. XIII, No. 24, p. 187).
 
The "plain language" of the law, Karlton wrote, "provides that any medical necessity information required from medical equipment suppliers may be submitted to the Secretary only by way of a Certificate of Medical Necessity, and not by other means, such as obtaining Medicare beneficiaries' medical records."
 
The bad news: Due to a twist of law, the losing defendant - the federal Department of Health & Human Services - will get to determine the appropriate reimbursement for the winning plaintiff.
 
"It's a strange situation where the party who loses the suit gets to set the damages," Maximum Comfort owner Tom Lambert tells Eli.
 
The situation arises because the claims were initially denied, so there has never been a definitive determination as to how much HHS owed the company in the first place. "The [durable medical equipment regional carrier] is now being instructed by the court decision that the documentation that was provided is sufficient to prove medical necessity - if in fact the CMN itself supports medical necessity," explains attorney Seth Lundy with Fulbright & Jaworski's Washington office.
 
The case began when the Region D DMERC investigated Lambert's company for alleged overuse of the K0011 code for power wheelchairs. Though Maximum Comfort provided CMNs with its claims, post-payment auditors said the company failed to submit additional documentation necessary to establish medical necessity and decided that it had been overpaid.
 
The company appealed. Two administrative law judges ruled in Lambert's favor, but the Medicare Appeals Council reversed the ALJs' decisions. Lambert then filed suit against HHS, and the case ultimately ended up in federal court, where Lambert again prevailed.
 
In his ruling issued last year, Karlton acknowledged that Congress granted HHS "broad discretion over the criteria required to prove medical necessity." However, he also found that the existing statute "plainly specifies that Congress intended that whatever information may be required by carriers from suppliers to show the medical necessity and reasonableness of DME must be contained in a CMN."
 
HHS is "operating outside of the law by forcing providers to come up with more than Congress intended," Lambert charges.
 
The government has 30 days from the date Karlton issued his order to file an appeal with the federal courts. The U.S. attorney who represented the government in the case did not return a request for comment on whether such an appeal was planned.
 
However, legal experts suggest the government might be reluctant to take the case to a federal appeals court because of the risk of establishing even broader precedent for a CMN policy HHS clearly opposes.

Good Chance for Payments with Interest

Lambert's decision to pursue the case has taken a heavy toll on his business, which as a result of the dispute spent over a year in Chapter 11 bankruptcy.
 
"We're still going hand to mouth," he reports. "We're a shell of what we used to be."
 
To date, HHS has collected about $270,000 from the company through offsets, and Lambert estimates that the government owes him about $460,000 in principle and interest. Adding in attorneys' fees, Lambert figures he's out about $1 million.
 
Maximum Comfort is likely to face a dispute with the government over interest payments, Lundy reports. However, "the supplier has a good argument for interest back to the date of the initial determination because they've won at every single level," he says.
 
But Lambert isn't expecting to see a check from the government any time soon. "I quit holding my breath a long time ago," he quips. "I was very blue."