Caring Hearts v. Burwell

On June 3rd, the Washington Post ran an article regarding a recent court opinion in the 10th Circuit that criticized CMS for not knowing its own regulations. The opinion can be found here. After a reading of the opinion, one thing is certain, it is good news for providers. The Washington Post does a great job picking out the main points of the opinion, but I am going to provide some background on what type of matter caused Caring Hearts to file suit.

Caring Hearts was issued a records request (audit) for a certain number of records/claims from a Zone Program Integrity Contractor (ZPIC). Caring Hearts then provided the records to the ZPIC. The records were from 2008. The ZPIC then reviewed the records/claims and determined that the claims did not meet certain criteria for home health services. (The discussion of "Homebound status" in the case). The claims that did not meet the criteria were denied and based on the percentage of denials in the number of claims reviewed (normally, in a ZPIC audit, denial rates are between 50%-100%).

After the denial rate is determined, it is extrapolated over the number of claims submitted for a certain time period. So, say a provider submits 2,837 claims over a period of two year (the time period the ZPIC is reviewing). The ZPIC finds an 87% error rate based on the claims submitted in the audit. That means that of the 2,837 claims, 2,468 of them were extrapolated to be faulty, and are therefore denied. (Simple math used here for demonstrative purposes as the ZPIC uses statistical methods to determine the amount). Since the 2,468 claims were denied, all money paid by CMS to the provider for those claims must be sent back to CMS (an "overpayment").

If a provider does not agree with the overpayment determination, it can appeal. There are 5 stages of appeal, each with a different timeline:

1.      Redetermination by an Fiscal Intermediary, carrier, or Medicare Administrative Contractor. (Must be filed within 120 days after notice of overpayment).
2.      Reconsideration by a Qualified Independent Contractor (“QIC”). (Must be filed 180 days after the decision on redetermination).
3.      Hearing by an Office of Medicare Hearings and Appeals (“OMHA”) Administrative Law Judge (“ALJ”). (Must be filed 60 days after the decision on reconsideration).
4.      Review by the Medicare Appeals Council within the Departmental Appeals Board, (hereinafter "MAC"). (Must be filed within 60 days of the ALJ’s decision).
5.      Judicial review in a U.S. District Court. (Must be filed within 60 days after the MAC’s decision).

In Caring Hearts, they most likely burned through all of the five stages above and then submitted an appeal to the 10th Circuit Court of Appeals. The 10th Circuit remanded the case back to the District Court because, as the Washington Post article points out, the agency (CMS) did not follow its own rules.

As I stated above, this is good news for providers as it gives them hope that an overpayment can be overturned. Normally, when a provider receives a ZPIC overpayment notice, it is very difficult to get overturned. However, the Caring Hearts case changes that. One concern though is that right now, it is only persuasive authority for every circuit outside of the 10th. Providers will have to wait until the Supreme Court decides to take a case regarding ZPICs.