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Tenth Circuit Says “CMS Is Unfamiliar With Its Own Law” In Pursuing Home Health Agency for Overpayments

In many industries, but especially health care, the amount of regulation and guidance issued by the responsible agencies is tremendous and continues to grow.  The Centers for Medicare and Medicaid Services (CMS) is no exception.  In a recent appeal by a home health agency, the Tenth Circuit examined the “pace [of CMS’] frenetic lawmaking,” finding that CMS applied a homebound status definition and documentation requirement that did not exist at the time the claims were submitted.

In Caring Hearts Personal Home Services., Inc. v. Burwell, No. 14-3243, 2016 BL 171256, (May 31, 2016), CMS litigated an alleged overpayment of about $800,000 for medically unnecessary home health services through the entire administrative process.  The services were provided in 2008, but, according to the Tenth Circuit, CMS applied the more restrictive 2010 version instead.  CMS took the position in this litigation that the 2010 changes simply clarified the prior rule and made it more consistent with the governing statute.  The Administrative Law Judge, the Department Appeals Board and even the United States District Court took the same view.  On appeal the Tenth Circuit disagreed.

The Tenth Circuit found that the 2008 version of the regulation applied to the claims, that Caring Hearts home health services and documentation content complied with that regulation, and that the statute did not clearly support CMS’ litigation position.  In 2008, CMS’s homebound definition stated that, “[g]enerally speaking, a patient will be considered homebound if they [sic] have a condition due to an illness or injury that restricts their ability to leave the place of residence except with the aid of: supportive devices such as crutches, canes, wheelchairs, and walkers … .”  In 2010, CMS added a second, more restrictive requirement – the patient must also “normal[ly]” be unable “to leave home” even with a wheelchair and any attempt to leave home must also “require a considerable and taxing effort.”  As for documentation requirements, no requirements existed in 2008.  The specific requirements CMS said the agency did not comply with were not created until 2010.

While Caring Hearts was dealt the lemon of defending this case, the opinion yields some potentially valuable lemonade in useful lessons and precedents for the rest of the health care community.  First, due to the way the case was argued below, the Tenth Circuit was not presented with a direct Chevron challenge to CMS’ homebound definition or documentation requirements.  While the court took some pains to say that it was not opining on whether the current homebound definition or documentation requirements were consistent with the statute, 42 U.S.C. § 1395f(a)(8), the opinion lays out a roadmap to this challenge.

Second, the court had the unusual opportunity to opine on section of the Social Security Act, 42 U.S.C. § 1395pp.  This section creates, according to the Tenth Circuit, “a sort of good faith affirmative defense” that permits payment for claims that are not payable for specific reasons, including for patients who do not qualify as homebound, if the provider did not know, and could not reasonably [...]

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Seventh Circuit Broadly Interprets “Referral” Under AKS

On February 10, 2015, the United States Court of Appeals for the Seventh Circuit broadly interpreted the term “referral” in the Anti-Kickback Statute (AKS), in a decision that could have significant implications for health care professionals.  The court held that a physician makes a “referral” under the AKS when he or she makes a “certification and recertification” that care is necessary, even though the physician did not steer patients to the particular provider. United States v. Kamal Patel, No. 14-cv-2607 (7th Cir. Feb. 10, 2015)

When patients of Dr. Kamal Patel, an internist in Chicago, needed home health care, Dr. Patel did not discuss with the patients which providers to use.  Rather, a member of his staff provided them with 10-20 home health care company brochures, and the patients chose one of those providers on their own.  Dr. Patel then “certified” the patient for 60 days of home care – and “recertified” if longer care was needed – by signing a Form 485 (a Medicare form that certifies that care is medically necessary and outlines a patient’s treatment plans) for each patient.

Dr. Patel allegedly accepted $400 in cash per certification and $300 per recertification from Grand Home Health Care (Grand) – one of those 10-20 providers.  Based on these facts, the lower court held that Mr. Patel “referred” patients to Grand when “he certified or recertified that the patient needed care, that the care would be provided by Grand, and that Grand could be reimbursed by Medicare for services provided.”

On appeal, Dr. Patel argued that the district court erred in holding that the certification and recertification process constituted a “referral” under the AKS. Instead, he said that to “refer” means to personally recommend a patient use a particular provider.  But Dr. Patel did not do that.  Instead, his patients chose the provider on their own, without discussing it with Dr. Patel.  The government countered that “refer” should include a doctor’s authorization of care, which would include the certification and recertification process.  Indeed, on at least one occasion, Dr. Patel withheld certification forms from Grand, until payment was made.  And, without those forms, Grand could not bill Medicare for the services it provided to Dr. Patel’s patients.

The court disagreed with Dr. Patel.  In reaching its decision, the Seventh Circuit found support in the definition of “referral” under certain state laws, the Stark law, and in the way that Dr. Patel even used the term on one occasion.  “Patel is correct that it does not matter who first identifies the care provider; what matters is whether the doctor facilitates or authorizes that choice,” the court stated.  “Patel acted as a gatekeeper to federally-reimbursed care. Without his permission, his patients’ independent choices were meaningless.”  What mattered to the court was not whether Dr. Patel steered patients to Grand but that Grand could not get paid by Medicare unless Dr. Patel certified the care – something that he did regularly in exchange for cash.

Several courts that have analyzed the issue, [...]

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