The United States Court of Appeals for the Tenth Circuit shot down CMS’s overpayment recoupment related to physical therapy and skilled nursing services, citing multiple errors in CMS’s appeal briefing and concluding that “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.” Furthermore, the Court alluded to the fact that CMS’s actions were not “substantially justified,” suggesting that the provider could reasonably seek attorney’s fees from the agency.
In Caring Hearts Personal Home Services, Inc. v. Burwell (No. 14-3243), CMS questioned whether the services provided by the plaintiff home health agency were “reasonable and necessary” and provided to “homebound” patients. The Tenth Circuit stated that although Congress had not clearly defined these key terms, CMS’s attempt to apply more onerous regulations and policy not in effect when Caring Hearts provided the services in dispute was inappropriate. Because Caring Hearts “can make out a pretty good case that its services were entirely consistent” with the regulations and policy that were in effect in 2008 when the services were provided, and because those regulations and policy were not contrary to the statute, the Court vacated the lower court’s order, which directed Caring Hearts to repay more than $800,000. Furthermore, the Court stated that it “would not be surprised if – should Caring Hearts bring an otherwise eligible application for [attorney’s] costs and fees under the Equal Access to Justice Act, 28 U.S.C. § 2412(d) – CMS were to accept on remand that its positions in this case were not ‘substantially justified.’”
With regards to whether a patient was “homebound,” the Medicare Benefit Policy Manual (MBPM) stated in 2008 that a patient is generally considered homebound if he/she has a condition restricting his/her ability to leave the home without the aid of a supportive device such as a wheelchair. MBPM, (CMS Pub. 100-02), Ch. 7, § 30.1.1 (Rev. 1, Oct. 1, 2003). That is, the MBPM focused on whether the patient could leave home without a supportive device.
By comparison, CMS’s current policy states that a homebound patient must normally be unable to leave the house, even with a supportive device. Under this newer interpretation, many Caring Hearts patients would not qualify as homebound. See MBPM, Ch. 7, § 30.1.1 (Rev. 208, May 11, 2015). The Court strongly suggested that CMS’s current policy may be inconsistent with the statute, but stopped short of actually reaching that issue because it found Caring Hearts’s interpretation of the underlying statute (42 U.S.C. § 1395f(a)) to be reasonable and consistent with CMS’s policy in 2008.
Furthermore, the Court held that Caring Hearts documented its services sufficiently to qualify as “reasonable and necessary.” The relevant statute, 42 U.S.C. § 1395y(a)(1)(A), does not dictate any specific documentation. Under current regulations, providers must meet a stringent documentation requirement to prove medical necessity of physical therapy services, but the Court found that this was not retroactive to the time period at issue. Instead, 42 C.F.R. § 409.44(c)(2)(I), as in effect in 2008, required simply that the services meet the “accepted standards of medical practice” – a benchmark Caring Hearts met. The Court also applied the less exacting standard for skilled nursing medical necessity documentation found in the MBPM in 2008.
The Court also roundly criticized CMS’s incorrect citations in its briefing, stating that “like the agency’s order itself, the agency’s briefing on appeal struggles to keep up with the right regulations, repeatedly citing and quoting and relying on the 2010 provisions . . . even go[ing] so far as to quote the 2010 language . . . with a mistaken parenthetical date reading ‘(2008)’.” CMS also attempted to argue that 42 U.S.C. § 13955pp would not allow it to relieve a provider of liability if the dispute centered on whether a patient was homebound. The Court rebuked CMS by stating that “here too it seems CMS is unfamiliar with its own law” noting that although the statute 30 years ago precluded relief related to homebound condition, that is not the current status of the law.
A copy of the Court’s decision is available here.
Reporter, Elizabeth N. Swayne, Washington, D.C., + 1 202 383 8932, eswayne@kslaw.com.
