Court Ruling Goes Against Pro-Home Health Provider Medicare Recoupment Trend

A recent court ruling against a home health care company could mean trouble for providers struggling financially as a result of Medicare recoupment, at least one legal expert believes.  

Currently, home health care providers that are overpaid for Medicare services are not required to repay the Centers for Medicare & Medicaid Services (CMS) while they’re actively engaged in at least the first two steps of a four-step administrative appeals process.

Traditionally, CMS begins recoupment at the beginning of the third step in the process, withholding current payments until the overpayment and interest are fully refunded.

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At that point, the appeal goes to the Office of Medicare Hearings and Appeals, where an administrative law judge (ALJ) weighs in. But due to a large backlog of overpayment cases, getting to an ALJ can take three to five years, causing home health to struggle financially without reimbursements in the meantime.

Recently, home health care companies have been triumphant in winning injunctions to stop recoupment.

“Two district courts in Texas, and one in South Carolina, have granted preliminary injunctions in favor of providers to stop recoupment while those providers endure the three-to-five year wait for their ALJ hearings,” Kent Hofmann, a partner at Dallas-based law firm Locke Lord LLP, wrote in a Monday Law360 column.

Providers successful in securing injunctive relief have argued denial of procedural due process and ultra vires — or that CMS was overstepping its authority in withholding reimbursement. The claims are based on the long wait times for ALJ hearings, which are out of line with the statute that says ALJs must conduct hearings and issue decisions within 90 days.

Additionally, courts have focused on the irreparable injury imposed on providers threatened by going years without Medicare payments. For example, in the South Carolina case, which CMS has appealed, the provider lost about $6 million in revenue before the injunction and had terminated 24 employees.

While it has recently become somewhat common for health care providers to be awarded injunctive relief, a recent court ruling against Florida-based Alpha Home Health Solutions could be a sign of changing tides, according to Hofmann.

In Alpha Home Health Solutions LLC v. Secretary of the U.S. Department of Health and Human Services (HHS), the court denied the provider any relief. The court found that a health care provider has no constitutionally protected interest in the overpayment of federal funds. As such, the provider could not successfully prove its due process claim.

Additionally, the court noted that the provider failed to prove irreparable injury because of recoupment and that providers knowingly take a risk of delayed payments when choosing to participate in Medicare.

As Alpha’s case — as well as the appeal out of South Carolina — continues to unfold, the outcomes could have ramifications for providers in similar boats going forward.

“Both the Fourth and Eleventh circuits may soon address these issues,” Hoffman wrote in the Law360 piece. “These cases bear watching by providers, particularly those suffering financial hardship as a result of recoupment as they wait for an ALJ hearing.”

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