“The Code of Federal Regulations now clocks in at over 175,000 pages.”

Judge Neil M. Gorsuch, U.S. Court of Appeals for the 10th Circuit

Caring Hearts Personal Home Care Services provided physical therapy and skilled nursing services to homebound Medicare patients. During an audit, CMS determined that Caring Hearts provided services to patients who didn’t qualify as homebound or that the services provided weren’t reasonable and necessary. CMS ordered Caring Hearts to repay more than $800,000.

Here’s an example.

During 2008, Caring Hearts provided care to a patient who was identified as L.Sm. L.Sm. was 85 years old, weighed 352 pounds, and suffered from diabetes, high blood pressure, and a host of other ailments. He struggled to walk 20 feet. He sometimes used a walker or cane, but he more or less lived in a wheelchair. L.Sm. wasn’t able to leave his house without some sort of supportive device. Years later during an audit, CMS determined that L.Sm. was not homebound.

Caring Hearts appealed the audit determination. During the administrative hearing, CMS determined that Caring Hearts knew or should have known that L.Sm. wasn’t homebound and that its conduct was unlawful. Caring Hearts appealed to the U.S. District Court in Kansas, which upheld the CMS decision. Caring Hearts then appealed to the U.S. Court of Appeals for the Tenth Circuit.

The Tenth Circuit agreed with Caring Hearts. Although the Tenth Circuit was convinced that L.Sm. was homebound, the more pertinent concern of the Tenth Circuit was that CMS applied regulations that were promulgated in 2013 to the care that Caring Hearts provided to L.Sm. in 2008. The Tenth Circuit emphasized that Caring Hearts couldn’t have known the 2013 regulatory standards when it provided care to L.Sm. five years earlier in 2008.

Another example.

Also in 2008, Caring Hearts provided care to a patient identified as L.D. She was a 71-year-old woman with diabetes, degenerative joint disease, chronic obstructive pulmonary disease, and controlled pain in her lower back, hips, and right leg. She experienced fatigue and weakness after walking 15 feet. Doctors prescribed physical therapy to increase her strength and decrease her pain. Thanks to the physical therapy, L.D increased her ability to walk by 50 percent and experienced a decrease in her reported back pain. Years later during an audit, CMS determined that the physical therapy services were not reasonable and necessary, citing standards in a federal regulation, § 409.44(c)(2)(i)(H)(4). CMS, as it turns out, provided information that the regulation was adopted in 2010.

The Tenth Circuit ruled in favor of Caring Hearts, stating, “But here again the agency appears unfamiliar with its own regulations. Back in 2008 there wasn’t any § 409.44(c)(2)(i)(H)(4). In fact, there never was and still isn’t.”

These statements of the Tenth Circuit will give you a little flavor of the decision:

CMS’s current regulations defining who qualifies as homebound look little like the regulations in effect when Caring Hearts provided care to L.Sm. in 2008.

CMS is unfamiliar with its own law.

Now maybe the agency’s confusion stems from the fact that the statute at one time didn’t allow CMS to address errors involving homebound status. But that was thirty years ago…

This case has taken us to a strange world where the government itself — the very “expert” agency responsible for promulgating the “law” no less — seems unable to keep pace with its own frenetic lawmaking.

But whatever else one might say about our visit to this place, one thing seems to us certain: an agency decision that loses track of its own controlling regulations and applies the wrong rules in order to penalize private citizens can never stand.

CMS conducts (and retains private contractors to conduct) a variety of different types of audits. Those audits are typically conducted years after services are provided to patients. In the meantime, new regulations are adopted, new regulatory guidance is issued, and new regulatory interpretations are made. Different CMS regions often provide inconsistent guidance. Regulations are in many cases vague or uncertain, utilizing terminology like “normally,” “normal inability,” “short duration,” “relatively short duration,” “inappropriate setting,” “allowable,” “contractual joint venture,” “bona fide investment,” and other words and phrases demonstrating the complexity and ambiguity of the regulatory climate, as well as the perversity of words. Some of the terms are circular. Many are inaccurate from a clinical standpoint, while others are inexact from a business or legal perspective. Many bear no relationship to industry practice, medical decision-making, or patient care.

Guidance is sporadically strewn throughout thousands of pages of CMS regulations, advisory opinions, sub-regulatory policy manuals, alerts, administrative decisions, agency publications, websites, social media sites, and official commentary. In many situations, CMS dictates clinical protocols for doctors and other medical professionals, which essentially equates to adopting regulations that would force artists to paint by number. Further, the retroactive application of regulations to conduct that occurred years earlier adds to the confusion. That confusion is magnified when the old rules and the retroactively applied newer rules are equally incomprehensible. And the confusion extends to physicians, nurses, patients, families, caregivers, hospital executives, payers, accountants, consultants, lawyers, and notably even CMS. This ocean of rules raises troubling questions about due process and fair notice.

Another court stated, the Medicare and Medicaid statutes are “among the most completely impenetrable texts within human experience.” Rehabilitation Association of Virginia v. Kozlowski, 42 F.3d 1444 (4th Cir. 1994). That isn’t a surprising comment about an agency that published “final interim rules on inherent reasonableness.”

The moral of this story is that healthcare providers should make sure that they are held to standards and requirements that are applicable when care is provided, and not standards and requirements that are developed at a later time. Sometimes, it’s extremely difficult to track down the dates.

I forgot to mention this comment of the Tenth Circuit:

In fact, CMS’s brief even goes so far as to quote the 2010 language of (H)(4) with a mistaken parenthetical date reading “(2008).”

Backdating describes a broad scope of conduct ranging from blatant fraud to the common practice of adding a date that is some time after the event occurred. Whether a given instance of backdating is legitimate or improper can be a complex, multi-faceted matter. It doesn’t escape attention that the Tenth Circuit gave CMS the benefit of the doubt, forgiving the false date of the regulation as a simple mistake. Consider that in the context of the False Claims Act.

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“It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; … or undergo such incessant changes that no man, who knows what the law is to-day, can guess what it will be to-morrow.”

James Madison, The Federalist No. 62