On September 19, 2016, the U.S. District Court for the District of Columbia rejected a request by HHS to stay proceedings in litigation brought by the American Hospital Association and several providers seeking to compel the Secretary to adjudicate Medicare claims appeals in accordance with statutory timeframes.  While the District Court was “reluctant to intervene,” it recognized that the backlog of delays had only worsened since plaintiffs’ filing of the action in May 2014.  The District Court denied the Secretary’s request to stay the proceedings through September 30, 2017, concluding that the Secretary’s proposed administrative and legislative efforts were “unlikely to turn the tide.”

As previously reported, the District Court denied relief and dismissed the action for lack of jurisdiction in December 2014, but that decision was overturned earlier this year by the U.S. Court of Appeals for the District of Columbia Circuit, which remanded the case to the District Court to determine whether there were compelling grounds to issue a writ of mandamus.  On remand, the Secretary moved to stay the action until September 30, 2017 -- the close of the next full appropriations cycle. 

In its decision on the Secretary’s motion to stay, the District Court structures its analysis around the D.C. Circuit’s factors for and against mandamus, and the “critical consideration of whether the legislative and executive branches are making ‘significant progress toward a solution,’” based on the fact that whether to grant the Secretary’s motion involves overlapping considerations with those of whether to grant mandamus relief.  After brief consideration of factors weighing against mandamus, such as the extraordinary and intrusive nature of the writ and the Secretary’s good faith efforts to reduce delays, and factors weighing in favor of mandamus, such as the real impact the delays have on human welfare, the District Court focuses on “whether the administrative and legislative fixes offered in the Secretary’s briefing constitute progress sufficient to warrant pausing this litigation until September 30, 2017.” 

With respect to administrative fixes, the District Court runs through a number of “impressive-sounding” administrative action items, including settlement-conference facilitation efforts and changes to the RAC program, but ultimately recognizes that, even if each fix is implemented according to plan, “the OMHA backlog will still grow every year between FY2016 and FY2020 – from 757,090 to 1,003,444 appeals.”  Thus, the Court concludes that the administrative fixes do not clear the bar for significant progress, stating that “‘significant progress toward a solution cannot simply mean that things get worse more slowly than they would otherwise.” 

With respect to legislative fixes, the District Court is likewise not persuaded that the President’s FY 2017 Budget or policy reforms included in the Audit & Appeals Fairness, Integrity, and Reforms in Medicare Act of 2015 (AFIRM Act) demonstrate significant progress, citing lack of Congressional action on the FY 2017 budget and twenty-one month lull in activity with respect to the AFIRM Act. 

A status conference with the parties is scheduled for October 3, 2016.  For a copy of the opinion, please click here. 

Meanwhile, in another opinion issued the same day, the District Court granted the Secretary’s motion to dismiss an action by Empire Health Foundation and two of its hospitals seeking judicial review of a remand order by the Provider Reimbursement Review Board (PRRB).  In that matter, Empire Health challenged the Medicare disproportionate share payments to the hospitals for fiscal years 2005 through 2007.  In October 2015, the PRRB remanded the dispute to the fiscal intermediary for recalculation pursuant to a 2010 ruling by CMS (CMS Ruling 1498-R) that attempted to fix the Medicare-Supplemental Security Income fraction portion of the DSH calculation, and instructed that any pending reimbursement appeals related to that issue be sent back to fiscal intermediaries for recalculation.  Among other things, Empire Health argued that the remand order was a jurisdictional dismissal constituting a final agency decision.  The District Court found, however, that the remand order did not constitute a final administrative decision from HHS and ruled that the hospitals could not obtain judicial review until completing the administrative appeal process. 

For a copy of the opinion, please click here.