FirstHealth Moore Reg'l Hosp. v. Becerra

Decision Date20 September 2021
Docket NumberCivil Action 20-1007 (BAH)
PartiesFIRSTHEALTH MOORE REGIONAL HOSPITAL, Plaintiff, v. XAVIER BECERRA, Secretary of Health and Human Services, Defendant.
CourtU.S. District Court — District of Columbia

BERYL A. HOWELL Chief Judge.

Plaintiff FirstHealth Moore Regional Hospital made a deliberate and strategic decision to pursue review of a calculation for reimbursement of Medicare uncollectible patient debts by asking the U.S. Department of Health and Human Services (“HHS”) contractor administering the calculation process to revisit certain issues that plaintiff believed involved errors. This choice of review process avoided the higher-overhead and potentially more time-consuming process of formal agency review authorized by statute. Ultimately however, when the contractor reviewed plaintiff's objections, made adjustments to certain calculations, and declined to make adjustments to others, this choice of review pathway, effectuated by withdrawal of the initial appeal foreclosed continuing with the formal appeals process before HHS's Provider Reimbursement Review Board (“PRRB”) for the items the contractor reviewed but did not adjust.

Plaintiff now seeks to force HHS to reinstate its formal appeal filed before the PRRB, arguing that the PRRB's rules unlawfully deprived plaintiff of statutory appeal rights, first, by forcing withdrawal of its formal appeal to pursue the more informal review process with the contractor and then, second by refusing to allow reinstatement of plaintiff's formal appeal after the informal contractor review failed to produce an entirely satisfactory modification of the reimbursement amount that plaintiff claims was erroneously calculated. HHS disputes plaintiff's first assertion and denies that agency rules forced plaintiff's initial withdrawal of its formal appeal, and also defends the agency's denial of plaintiff's right to reinstatement of the formal appeal after the informal contractor review process was completed. Thus, at issue is not only what the agency's review rules actually provide but also whether those rules are lawful. In the agency's view, plaintiff took two voluntary steps by seeking informal contractor review and withdrawing its formal agency appeal, the combination of which extinguished its formal appeal rights.

This case offers a cautionary tale to any provider navigating “the labyrinthine world of Medicare, ” Adirondack Med. Ctr. v. Sebelius, 740 F.3d 692, 694 (D.C. Cir. 2014), and HHS's complex system of reimbursements. Plaintiff withdrew its formal agency appeal based on an understanding of a rule making the healthcare provider “responsible” for doing so, combined with the further understanding that reinstatement of that formal appeal would be possible if sought. Plaintiff apparently also believed that the relevant regulations provided a right to maintain or revive its appeal as to any issue that the contractor reviewed, regardless of whether the contractor modified the outcome as to that issue. Indeed, the governing regulations and PRRB rules may allow for misinterpretation. Improving the clarity of the Medicare rules, however, is not a task for this Court.

As explained more fully below, (a) the agency's interpretation of its rules is reasonable and entitled to deference; (b) the rules, as so interpreted, are lawful; and (c) the agency correctly applied the rules under its interpretation. Presented with two routes by which it could obtain review of Medicare reimbursement calculations with which it disagreed, plaintiff chose one route over the other and must now bear the consequences of that choice. Accordingly, summary judgment is granted to defendant HHS and denied to plaintiff.


The statutory and regulatory scheme underlying the parties' dispute is described below, followed by the factual and procedural history in this case.

A. Statutory and Regulatory Background

“Medicare is a federally funded program that reimburses healthcare providers for delivering medical care to qualifying elderly and disabled individuals.” New LifeCare Hosps. of N.C., LLC v. Becerra, 7 F.4th 1215, 1219 (D.C. Cir. 2021) (citing 42 U.S.C. § 1395 et seq.). Participating healthcare providers, such as plaintiff, receive reimbursement from the HHS Secretary for health care services provided to enrollees. 42 U.S.C. § 1395g. Much of the administration of these payments is performed by private Medicare Administrative Contractors (“MACs”) acting on behalf of the Secretary. Id. §§ 1395h(a), 1395kk-1(a)(4); 42 C.F.R. §§ 421.100, 421.400.

Each fiscal year, a participating hospital files a “cost report” with its MAC to provide the basis for calculating reimbursements due the hospital for services provided to beneficiaries over the course of the year. 42 C.F.R. §§ 413.20, 413.24(f); see also New LifeCare Hosps., 7 F.4th at 1220 (“Healthcare providers file annual cost reports with these contractors, 42 C.F.R. § 413.20(b), and the contractors issue notices indicating which payments Medicare will cover, id. § 405.1803(a).”). The MAC reviews and audits the cost report and thereafter issues a Notice of Program Reimbursement (“NPR”) indicating the MAC's determination of amounts to be paid to, or recouped from, the hospital. 42 C.F.R. §§ 405.1803, 413.60, 413.64(f).[1]

“Providers can then appeal reimbursement decisions from the contractors to the Provider Reimbursement Review Board ([“PRRB”]), an administrative tribunal within HHS.” New LifeCare Hosps., 7 F.4th at 1220 (citing 42 U.S.C. § 1395oo(a)). The provider's appeal of an NPR issued by the MAC must be within 180 days of its issuance if the provider is “dissatisfied . . . as to the amount of total program reimbursement due the provider” and “the amount in controversy is $10, 000 or more.” 42 U.S.C. § 1395oo(a); 42 C.F.R. § 405.1835. The statute vests in the PRRB “full power and authority to make rules and establish procedures” to govern the appeals and review process. 42 U.S.C. § 1395oo(e). The PRRB has periodically issued such rules, which are not promulgated through a notice-and-comment process. As relevant here, one set of rules (the 2015 PRRB Rules”) was effective starting July 1, 2015, and another set (the 2018 PRRB Rules”) has been in effect since August 29, 2018. This action spans both versions of the PRRB Rules, but they are materially interchangeable in relevant respects other than numbering. A provider may seek judicial review, including in this Court, of any final PRRB decision within 60 days of its issuance. 42 U.S.C. § 1395oo(f)(1).[2]

In addition to the review mechanism available through the PRRB, the Secretary by regulation has also made available an alternative review process by which an NPR may be “reopened, with respect to specific findings on matters at issue in a determination or decision.” 42 C.F.R. § 405.1885(a)(1). Such a process, the Secretary has recognized, may “hasten resolution of the case.” Medicare Program; Provider Reimbursement Determinations and Appeals, 73 Fed.Reg. 30, 190, 30, 232 (May 23, 2008). The MAC may-but is not required to- reopen a matter sua sponte or “by granting the request of the provider affected.” 42 C.F.R. § 405.1885(a)(2). A provider may still appeal revisions made by the MAC in the reopening process, but only with respect to “those matters that are specifically revised in a revised determination or decision.” Id. § 405.1889(b); see also Def.'s Mem. Supp. Opp'n Pl.'s Mot. Summ. J. & Cross-Mot. Summ. J. (“Def.'s Opp'n”) at 4, ECF No. 16-1 (noting that “appeals of post-reopening revised NPRs are limited to the specific matters at issue that are adjusted by the Contractor in the revised NPR” (citing 42 C.F.R. § 405.1887(d))). A Revised NPR is ‘final and binding' unless it is further revised as a result of an appeal or a later reopening.” Def.'s Opp'n at 4 (quoting 42 C.F.R. § 405.1807).

MAC reopening and PRRB appeals may proceed simultaneously, since a MAC “may reopen . . . [a] determination that is currently pending on appeal before the [PRRB] or Administrator.” 42 C.F.R. § 405.1885(c)(3). Nevertheless, [a]ny matter that is not specifically revised (including any matter that was reopened but not revised) may not be considered in any appeal of the revised determination or decision.” Id. § 405.1889(b)(2). The PRRB appeal route and a reopening request to the MAC are thus distinct, concurrently available methods by which a provider may seek review of an NPR, though they become mutually exclusive when the MAC declines to revise an original determination on a reopened review.

The PRRB rules allow a provider to request to withdraw an issue(s) or case” from appeal. 2015 PRRB Rule 48; see also 2018 PRRB Rule 46. This particular rule further states that [i]t is the Provider's responsibility to withdraw . . . an issue(s) for which the [MAC] has agreed to reopen the final determination for that issue(s) and attach a copy of the correspondence from the [MAC] where the [MAC] agreed to that reopening.” 2015 PRRB Rule 48. A provider “may request reinstatement of an issue(s) . . . within three years” of the PRRB's receipt of the withdrawal request by filing a motion “in writing setting out the reasons for reinstatement.” 2018 PRRB Rule 47.1. In the instance of issues withdrawn “because the [MAC] agreed to reopen/revise the cost report for that issue(s), ” reinstatement is available if the MAC “failed to reopen the cost report and issue a new final determination (e.g., Revised NPR) for that issue(s) as agreed.” Id. R. 47.2.2.[3] In other words, if the reopened MAC review is not completed, the provider may reinstate the formal appeal to the PRRB, but that reinstatement must be sought within three years from the date of withdrawal of the issue.

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