IN RE TRI COUNTY HOME HEALTH
| Decision Date | 19 February 1999 |
| Docket Number | Bankruptcy No. 99-10365,Adversary No. 99-5037. |
| Citation | 230 BR 106 |
| Parties | In re TRI COUNTY HOME HEALTH SERVICES, INC., Debtor. Tri County Home Health Services, Inc., Plaintiff, v. United States Department of Health and Human Services, Defendant. |
| Court | U.S. Bankruptcy Court — Western District of Tennessee |
Samuel K. Crocker, Nashville, TN, for Debtor/Plaintiff.
Jimmy Croom, Assistant U.S. Attorney, Jackson, TN, for Defendant.
Greg Bongiovanni, Assistant Regional Counsel, Office of the General Counsel, Atlanta, GA, for Defendant.
The Plaintiff in this matter, Tri County Home Health Services, Inc. ("Tri County"), has filed an application for a preliminary injunction against the United States Department of Health and Human Services ("HHS"). At issue are Medicare reimbursements which are currently being withheld by HHS under the authority of the Medicare statute at 42 U.S.C. § 1395 et seq., and toward the recoupment of Medicare overpayments previously made to the Plaintiff.
The Court conducted a hearing on Tri County's application on February 12, 1999, pursuant to FED. R. BANKR. P. 9014. After reviewing the testimony from the hearing and the record as a whole, the Court makes the following findings of facts and conclusions of law. FED. R. BANKR. P. 7052.
The Medicare program, established under Title XVIII of the Social Security Act (commonly known as the Medicare Act, and codified at 42 U.S.C. § 1395 et seq.), is a social insurance program which pays for covered medical items and services provided to eligible aged and disabled persons. HHS enters into contracts, known as provider agreements, with health care entities which will treat Medicare beneficiaries in return for Medicare reimbursement. 42 U.S.C. § 1395cc(e)(2); Heckler v. Community Health Serv. of Crawford County, Inc., 467 U.S. 51, 54-55, 104 S.Ct. 2218, 81 L.Ed.2d 42 (1984), reh'g denied, 475 U.S. 1061, 106 S.Ct. 1289, 89 L.Ed.2d 596 (1986). Under a Medicare provider agreement, a health care entity agrees to charge Medicare beneficiaries only the statutorily mandated deductible and co-insurance amounts and otherwise to take its payment solely from the Medicare program. 42 U.S.C. § 1395cc(a). HHS may not reimburse an agency for services unless the agency is operating under a valid provider agreement. 42 U.S.C. § 1395f(a).
By statute, a provider is reimbursed for the actual "reasonable cost" of providing services to Medicare beneficiaries. "Reasonable cost" is determined in accordance with cost accounting regulations establishing the methods to be used and the times to be included. 42 U.S.C. § 1395x(v)(1)(A). Medicare reimbursement does not provide for the making of a profit. The principal reimbursement regulations appear at 42 C.F.R. § 413 et seq.
Reimbursement to providers for services rendered to Medicare beneficiaries is made by private organizations, such as Palmetto Government Benefits Administrators, Inc., ("Palmetto"). These organization act as fiscal intermediaries under contract with HHS. 42 U.S.C. § 1395h. The payment function requires ascertaining the "reasonable cost" of services rendered to beneficiaries. This payment process is a multi-faceted system. Interim payments are made to providers not less than monthly, with subsequent adjustments made for overpayments and underpayments, based on reviews of annual cost reports submitted by the provider and of additional information submitted throughout the year. 42 U.S.C. §§ 1395g(a), 1395x(v)(1)(A)(ii), 42 C.F.R. §§ 413.5(b)(1), (2), 413.64. "The intent is that the interim payments shall approximate actual costs of providing Medicare services as nearly as possible...." 42 C.F.R. § 413.64(b).
Interim payments are only estimates of what is actually due the provider. An intermediary may adjust the interim rate of payment if it has evidence that a provider's actual costs fall significantly below the computed rate. 42 C.F.R. § 413.64(e). The primary source of such evidence is the cost report information which the provider must file at periodic intervals.1
Certain providers may be paid by a special reimbursement methodology known as periodic interim payments or "PIP." On PIP, a provider receives a standardized amount in Medicare reimbursement once every two weeks (based upon estimates of the provider's cost in providing services at its current volume of activity). PIP is an alternative to "the regular methods of interim payment on individual provider billings for ... services," 42 C.F.R. § 413.64(h)(1), and it may only be implemented, and may only remain in effect, when the provider satisfies certain criteria. See generally, § 413.64(h)(2), (3). Providers often favor reimbursement by the PIP methodology because of the regularity and predictability it means for their cash flow. However, the regulations recognize that PIP payments can result in an "undue risk of ... an overpayment" in various circumstances. § 413.64(h).
As designed by Congress, the Medicare reimbursement method is one of interim payments (based on estimates of a provider's costs) subject to subsequent adjustments. As is apparent, a subsequent review can reveal that the interim payments have exceeded the provider's actual costs, and hence, that the provider has been overpaid.
The Medicare statute at 42 U.S.C. § 1395g(a) expressly directs HHS to make "necessary adjustments on account of previously made overpayments." Under this statutory mandate, the HHS "shall periodically determine" what a provider "should" be paid and accordingly make the "necessary adjustments" to reconcile this determination with what the provider was "previously" paid. 42 U.S.C. § 1395g(a). Thus, it may accurately be stated that a provider's proper "payment" is the amount disbursed by the Medicare program (in the form of interim payments) minus adjustments for any previous overpayments (or plus adjustments for previous underpayments).
Concerned with the extraordinary growth in Medicare spending for home health services, Congress created a new statutory payment method for home health providers in the Balanced Budget Act of 1997 ("the BBA"), Public Law 105-33, at §§ 4604 et seq. ( 42 U.S.C. § 1395x(v)(1)(L)). See also, 63 Fed.Reg. 15718 ff. (March 31, 1998). For fiscal years commencing October 1, 1997, or thereafter, a home health provider is reimbursed the lowest of (i) the provider's actual reasonable allowable costs, (ii) a per-visit limitation in the aggregate, or (iii) a per-beneficiary limitation on the aggregate. Id. In brief, the effect of this law is to place a cap on what the home health provider can be paid. These new statutory criteria have resulted in significant changes to the payment of some home health providers. However, the BBA did not alter the basic premises set forth above: that the home health provider's reimbursement is based on costs; that its payments will be based on estimates, subject to retrospective adjustments; and that Medicare overpayments can occur.
The relevant facts in this case are straight-forward and undisputed. The Plaintiff operates a home health agency which participates in the Medicare program, pursuant to a provider agreement. The Plaintiff is reimbursed for services rendered to Medicare beneficiaries. The Plaintiff is reimbursed in the form of PIP payments. Palmetto is the Medicare fiscal intermediary which, under contract with HHS, administers the claims processing, reimbursement, auditing, and other related functions with regard to this Plaintiff.
On or about December 14, 1998, upon a review of the Plaintiff's payment rates in light of information submitted by the Plaintiff, Palmetto determined that the Plaintiff had been overpaid in the amount of $2,000,417 for the fiscal year which ends ("FYE") June 30, 1999. Palmetto notified the Plaintiff of this determination in writing. Also, the data submitted by the Plaintiff on its annual Medicare cost report for FYE June 30, 1998, showed a Medicare overpayment of some $221,824.00 in that fiscal year.
The Plaintiff filed its bankruptcy petition on January 14, 1999. Palmetto, as Medicare fiscal intermediary and as agent for HHS, has been withholding the Plaintiff's Medicare reimbursement since that date, as an adjustment for previously-made and determined Medicare overpayments made to the Plaintiff.
It is the burden of the party seeking a preliminary injunction to show that it is entitled to one, not the burden of the other party to show that the movant is not entitled. Granny Goose Foods, Inc. v. Bhd. of Teamsters, 415 U.S. 423, 443, 94 S.Ct. 1113, 39 L.Ed.2d 435 (1974); North Am. Coal Corp. v. Local Union 2262, UMW, 497 F.2d 459, 465 (6th Cir.1974). For the reasons set forth infra the Plaintiff cannot establish that a preliminary injunction is in order in this case. Therefore, the Plaintiff's application is denied.
An injunction is an extraordinary remedy. Charter Township of Huron v. Richards, 997 F.2d 1168, 1175 (6th Cir.1993); Stenberg v. Cheker Oil Co., 573 F.2d 921, 925 (6th Cir.1978). Before granting such an extraordinary remedy, a court should pay particular regard for the public consequences in employing it. Weinberger v. Romero-Barcelo, 456 U.S. 305, 312, 102 S.Ct. 1798, 72 L.Ed.2d 91 (1982); Railroad Comm'n v. Pullman Co., 312 U.S. 496, 500, 61 S.Ct. 643, 85 L.Ed. 971 (1941).
The four elements to be considered when a movant seeks a preliminary injunction are (1) whether the movant has shown a strong or substantial likelihood or probability of success on the merits; (2) whether...
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