903 F. Supp. 2d 39
D.D.C.2012Background
- Providers sue to challenge CMS's denial of Medicare bad debt reimbursements for dual-eligible inpatients from May 1, 1994 to June 30, 1998.
- CMS denied reimbursement based on Secretary's must-bill policy requiring State determinations of payment responsibility for dual-eligibles.
- California Medi-Cal stopped paying dual-eligible cost sharing in 1994; later amended plan introduced a payment ceiling and state determinations for reprocessing claims.
- In 1999 California reprocessed claims and issued lump-sum bad debt payments; Providers later contested remaining claims not covered by those determinations.
- PRRB found in Providers' favor; CMS Administrator reversed, requiring a State determination before bad-debt reimbursement.
- Court grants Secretary summary judgment, denying Providers’ claims and upholding must-bill interpretation as applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the must-bill policy violates the Bad Debt Moratorium. | Providers argue moratorium invalidates must-bill. | Secretary contends must-bill is a valid, longstanding interpretation. | Not considered; issue waived. |
| Whether the Secretary properly applied the must-bill policy to deny these claims. | Claims followed prior lump-sum process; State determinations existed via methodology. | No State determinations for these claims; must bill and obtain State determination before reimbursement. | Held that Secretary's application was reasoned and supported by record. |
| Whether former PRM-II § 1102.3L and the hold harmless provision govern this case. | Former 1102.3L allowed alternative documentation; hold harmless should apply. | Former provision superseded by JSM-370; hold harmless not applicable here. | Secretary’s denial upheld; former provision not enforceable. |
| Whether cost-shifting prohibitions are violated by the Secretary’s decision. | Denial shifts costs to non-Medicare patients. | Costs at issue were not reimbursable; cost-shifting not implicated. | Not violated; decision affirming non-reimbursable costs stands. |
| Whether the administrative record supports the State determinations or lack thereof for the claims at issue. | State determinations existed in lump-sum process; providers relied on that. | No State determinations for these specific claims; reliance on provider-generated estimates is improper. | Record supports lack of State determinations; court defers to Secretary's interpretation. |
Key Cases Cited
- Monterey Peninsula Hosp. Ass'n v. Thompson, 323 F.3d 792 (9th Cir. 2003) (upheld must-bill policy as reasonable interpretation)
- Cove Assocs. Joint Venture v. Sebelius, 848 F. Supp. 2d 13 (D.D.C. 2012) (must-bill policy is not inconsistent with regulations)
- GCI Health Care Centers v. Thompson, 209 F. Supp. 2d 63 (D.D.C. 2002) (deference to Secretary’s interpretation of Medicare regulations)
- Summer Hill Nursing Home LLC v. Johnson, 603 F. Supp. 2d 35 (D.D.C. 2009) (remand where later-routed determinations affected reimbursement)
- Cmty. Hosp. of the Monterey Peninsula v. Thompson, 323 F.3d 782 (9th Cir. 2003) (reiterates must-bill policy context in dual-eligible bad debts)