Mercy Gen. Hosp. v. Azar, Civil Action No. 16-99 (RBW)
Decision Date | 29 September 2018 |
Docket Number | Civil Action No. 16-99 (RBW) |
Citation | 344 F.Supp.3d 321 |
Parties | MERCY GENERAL HOSPITAL, et al., Plaintiffs, v. Alex M. AZAR II, in His Official Capacity as Secretary of the United States Department of Health and Human Services, Defendant. |
Court | U.S. District Court — District of Columbia |
Lori Allison Rubin, Brian J. Kapatkin, Donald H Romano, Foley & Lardner, LLP, Washington, DC, for Plaintiffs.
Brian J. Field, U.S. Attorney's Office, Civil Division, Linda L. Keyser, U.S. Attorney's Office for the District of Columbia, Washington, DC, for Defendant.
REGGIE B. WALTON, United States District JudgeTheplaintiffs, eighty-one acute care hospitals located in California, seek judicial review of the final decision of the defendant, the Secretary of the United States Department of Health and Human Services("HHS"), denying their claims for reimbursement of deductible and coinsurance payments that were not paid to the hospitals by Medicare beneficiaries.SeeComplaint ("Compl.")¶¶ 1–2.The parties filed cross-motions for summary judgment, seePlaintiffs' Motion for Summary Judgment; Defendant's Cross-Motion for Summary Judgment and Opposition to Plaintiffs' Motion for Summary Judgment, and United States Magistrate Judge Deborah A. Robinson issued a Report and Recommendation (the "Report" or "R & R") recommending that the Court affirm the Secretary's decision, deny the plaintiffs' motion, and grant the Secretary's cross-motion, seeR & Rat 30.Currently before the Court are the plaintiffs' Objections to the Magistrate Judge's Report and Recommendation ().Upon consideration of the parties' submissions, the parties' arguments presented at the motions hearing on February 2, 2018, and the administrative record in this case,1the Court concludes that it must grant in part and deny in part the plaintiffs' motion for summary judgment, deny the Secretary's cross-motion for summary judgment, and remand this case to the Secretary for further proceedings consistent with this opinion.
The Medicare program, established in 1965 as Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395 – 1395lll(2012)(the "Medicare Act"), "is a federally funded medical insurance program for the elderly and disabled,"Fischer v. United States, 529 U.S. 667, 671, 120 S.Ct. 1780, 146 L.Ed.2d 707(2000)(internal citation omitted).Relevant here, Part A of the Medicare Act provides insurance coverage to eligible beneficiaries for the cost of inpatient hospital care, home health care, and hospice services, see42 U.S.C. § 1395c, and Part B provides supplemental coverage for outpatient hospital care and other types of care not covered by Part A, seeid.§ 1395k."Although the costs incurred for most of the care provided to Medicare patients are borne by the government, individual Medicare patients are ‘often responsible for both deductible and coinsurance payments for hospital care.’ "Cmty. Health Sys., Inc. v. Burwell, 113 F.Supp.3d 197, 203–04(D.D.C.2015)(quotingHennepin Cty. Med. Ctr. v. Shalala, 81 F.3d 743, 745(8th Cir.1996) ).
The Centers for Medicare and Medicaid Services ("CMS") administers the Medicare program on behalf of the Secretary, seeArk. Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275, 126 S.Ct. 1752, 164 L.Ed.2d 459(2006), "through contracts with [M]edicare administrative contractors,"42 U.S.C. §§ 1395h(a),1395u(a), which were known as "fiscal intermediaries"(the "intermediaries") during the cost years at issue in this case, id.§ 1395h(2000).To receive reimbursement from Medicare, providers must submit to their intermediaries "cost reports ... on an annual basis."42 C.F.R. § 413.20(b)(2017).The intermediaries then review these reports to determine the amount of reimbursement due to the providers.See42 U.S.C. § 1395kk-1(a)(4).Following their review, the intermediaries "must ... furnish the provider ... a written notice reflecting ... [their] final determination of the total amount of reimbursement due [to] the provider."42 C.F.R. § 405.1803(a).
A provider who "is dissatisfied with a final determination of ... its [ ] intermediary,"42 U.S.C. § 1395oo(a)(1)(A)(i), "may obtain a hearing ... by a Provider Reimbursement Review Board"(the "Board"), id.§ 1395oo(a)."A decision by the Board [must] be based upon the record made at such hearing, ... and shall be supported by substantial evidence when the record is viewed as a whole."Id.§ 1395oo(d).The Board's decision is "final unless the Secretary, [via the CMS Administrator (the "Administrator"),] ... reverses, affirms, or modifies the Board's decision."Id.§ 1395oo(f)(1);42 C.F.R. § 405.1875( ).Finally, a provider may "obtain judicial review of any final decision of the Board[ ] or ... the [Administrator]."42 U.S.C. § 1395oo(f)(1);see42 C.F.R. § 405.1877().
The Medicaid program, established under Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 – 1396w-5, "authorizes federal financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons,"Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 650, 123 S.Ct. 1855, 155 L.Ed.2d 889(2003)."In order to participate in the Medicaid program, a [s]tate must have a plan for medical assistance approved by the Secretary,"id.(citing42 U.S.C. § 1396a(b) ), which must, among other things, "define[ ] the categories of individuals eligible for benefits and the specific kinds of medical services that are covered,"id.(citing42 U.S.C. § 1396a(a)(10), (17) ).
During the cost years at issue, California participated in Medicaid through a program known as Medi-Cal.See AR 12.Effective August 1, 1989, Medi-Cal instituted a payment ceiling for Medicare deductibles and coinsurance for outpatient services.See AR 606.Effective May 1, 1994, Medi-Cal instituted a similar ceiling for inpatient services.See AR 680–83; see also AR 1412, 1422.
If Medicare patients fail to pay the deductible and coinsurance payments that they owe to providers, the providers may seek reimbursement from CMS for these amounts, known as "bad debts."See42 C.F.R. § 413.89(e).3To obtain reimbursement for these bad debts, providers must demonstrate that the debt satisfies four criteria:
Chapter 3 of CMS's Provider Reimbursement Manual ("PRM") provides further instruction regarding the requirements for bad debt reimbursement.As to the second bad debt criterion, regarding "reasonable collection efforts,"§ 310 provides that "a reasonable collection effort ... must involve the issuance of a bill on or shortly after discharge or death of the beneficiary to the party responsible for the patient's personal financial obligations."CMS Pub. 15-1, § 310(hereinafter "PRM").However, § 312, which addresses bad debts associated with "indigent or medically indigent" patients, provides that "[o]nce indigence is determined and the provider concludes that there ha[s] been no improvement in the beneficiary's financial condition, the debt may be deemed uncollectible without applying the §[ ]310 procedures."Id.§ 312.To determine indigency, § 312 instructs that "[p]roviders can deem Medicare beneficiaries indigent or medically indigent when such individuals have also been determined eligible for Medicaid as either categorically needy individuals or medically needy individuals, respectively."Id."Otherwise, the provider should apply its customary methods for determining the indigence of patients to the case of the Medicare beneficiary, under [PRM] guidelines[,]" including that "[t]he provider must determine that no source other than the patient would be legally responsible for the patient's medical bill;e.g., title XIX[ (Medicaid) ], local welfare agency[,] and guardian[.]"Id.
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