RICU LLC v. United States Dep't of Health & Human Servs.
| Decision Date | 20 August 2021 |
| Docket Number | 21-cv-452 (CRC) |
| Parties | RICU LLC, Plaintiff, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
In the spring of 2020, Congress passed a series of laws enabling the Department of Health and Human Services (“HHS”) to temporarily extend Medicare coverage to a range of services, including critical telehealth services, in response to COVID-19. Exercising that authority, HHS promulgated an interim final rule that, among other things, added remotely-provided intensive care services to Medicare's eligibility list. Enter RICU LLC, which operates a network of intensive care doctors who live abroad but provide remote ICU services to patients in the United States. After HHS announced the interim rule, RICU inquired whether Medicare would now cover its services. HHS answered in the negative reasoning that reimbursement for RICU's services remained barred by Medicare's longstanding prohibition on payments for services rendered outside the U.S. A protracted dialogue ensued, culminating in RICU filing this lawsuit and moving for a preliminary injunction. Finding that RICU failed to channel its reimbursement request through Medicare's mandatory administrative claims process and that it does not qualify for a narrow exception to the channeling requirement the Court denies RICU's motion for a preliminary injunction and dismisses the case for lack of jurisdiction.
In 1965, Congress passed the Social Security Amendments Act, commonly known as Medicare. Section 1862(a)(4) of the Act prohibited Medicare payments for services “not provided within the United States[.]” Pub. L. No. 89-97 § 1862(a)(4) (codified at 42 U.S.C. § 1395y(a)(4)); see also 42 C.F.R. § 411.9(a) (). Following the parties' lead, the Court will refer to this provision as the “foreign payments ban.”
Fast forward 35 years. In an attempt to broaden Medicare's coverage of emerging telehealth services, Congress passed the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. Pub. L. No. 106-554 § 223 (codified at 42 U.S.C. § 1395m(m)), otherwise known as the Telehealth Statute. Section 1395m(m)(1) of the statute provides that HHS “shall pay for telehealth services that are furnished via a telecommunications system by a physician . . . to an eligible telehealth individual . . . notwithstanding that the individual physician or practitioner providing the telehealth service is not at the same location as the beneficiary.” Id. The statute defines “eligible telehealth individual” as a Medicare Part B beneficiary who “receives a telehealth service furnished at an originating site.” Id. § 1395m(m)(4)(B). An “originating site, ” meanwhile, is a hospital, clinic, or other facility where the patient is located when the service is furnished. Id. § 1395m(m)(4)(C). By contrast, the location from which the telehealth physician provides services is referred to as the “distant site[.]” Id. § 1395m(m)(4)(A). Finally, § 1395m(m)(2)(A) provides that the Secretary shall pay the physician the amount he or she “would have been paid under this subchapter had [the] service been rendered without the use of a telecommunications system.” HHS issued a Final Rule implementing the Telehealth Statute on November 1, 2001. See 66 Fed. Reg. 55246 (codified at 42 C.F.R. § 410.78) (“Telehealth Rule”).
Nineteen years later, Congress sought to expand public access to health services in response to the COVID-19 pandemic through a series of acts passed in the spring of 2020. See Coronavirus Preparedness and Response Supplemental Appropriations Act, Pub. L. No. 116-123, 134 Stat. 146 (Mar. 6, 2020); Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (Mar. 18, 2020); Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, 134 Stat. 281 (Mar. 27, 2020). These statutes enabled HHS “to temporarily waive or modify the application” of Medicare requirements governing a range of services, including ICU-level telehealth care. 42 U.S.C. § 1320b-5(b)(8), (g)(1)(B). Pursuant to that authority, HHS promulgated an Interim Final Rule (“IFR”) that, among other things, waived certain statutory requirements for Medicare reimbursement of telehealth care and expanded the list of telehealth services eligible for reimbursement. See 85 Fed. Reg. 19230, 19236 (Apr. 6, 2020).
The IFR became a final rule on December 28, 2020. See 85 Fed. Reg. 84472 (Dec. 28, 2020). It contains a sunset provision providing for removal of the added telehealth services at the end of 2021. Id. at 84517. However, the rule notes that HHS “could foresee a reasonable potential likelihood of clinical benefit . . . outside the circumstances of the [public health emergency] for COVID-19[.]” Id. at 84507.
RICU is a telehealth company that provides critical care services-i.e., services typically offered in a hospital's intensive care unit. See Rabinowitz Decl. ¶ 4. Physicians providing this type of care are known as “intensivists.” Id. RICU contracts with about 60 intensivists who work outside the United States but have U.S. training and board certifications. Id. ¶¶ 8-10. Since RICU's establishment in 2009, the company has grown at a rate of over 35% per year. Id. ¶ 34. RICU claims that its growth accelerated at the onset of the COVID-19 pandemic, but then “ground to a halt” after HHS issued the IFR and determined that RICU's services would remain ineligible for Medicare coverage. Id. ¶¶ 34, 38.
On April 22, 2020 (about two weeks after HHS issued the IFR), RICU's president, Seth Rabinowitz, emailed HHS's Centers for Medicare and Medicaid Services (“CMS”) “seeking an urgent clarification” about the IFR's expanded coverage of telehealth services. See Compl. Ex. 2. The Acting Director of CMS's Chronic Care Policy Group, Jason Bennett, responded on June 1, 2020, informing Rabinowitz that following “an exhaustive review of the statute and regulations” CMS concluded that Medicare could not cover RICU's services. See Compl. Ex. 4. Bennett explained first that the IFR had no effect on the longstanding foreign payments ban, which “prohibits Medicare payment for services that are not furnished within the United States[.]” Id. He then noted that the 2001 Telehealth Rule “indicates that a telehealth service is furnished at the originating site and also at the distant site[.]” Id. (emphasis added). In other words, CMS took the position that RICU's doctors were providing telehealth services at two geographic locations: the U.S. location of the patient and the non-U.S. location of the RICU intensivist. CMS thus determined that payment for RICU's services was prohibited by the foreign payments ban. See id. (“Because the service is considered to be furnished at both sites, both sites are subject to the statutory payment exclusion that prohibits Medicare payment for services that are not furnished within the United States.”).
Approximately three weeks later, CMS updated the FAQ page on its website to note that the IFR would not cover telehealth services provided by doctors located abroad. See CMS, COVID-19 Frequently Asked Questions (FAQs) on Medicare Fee-for-Service (FFS) Billing 73 (last updated on July 2, 2021), https://www.cms.gov/files/document/03092020-covid-19-faqs-508.pdf. The following month, the same page was updated again to elaborate on why such services are not covered, concluding that “a telehealth service is considered to be furnished at both the originating site and the distant site” and the Medicare laws “prohibit . . . payment for services that are not furnished within the United States.” Id. at 82.
Meanwhile, Mr. Rabinowitz went about disputing the conclusions contained in Mr. Bennett's letter with increasingly senior CMS personnel. See Rabinowitz Decl. ¶¶ 30-31. On July 9, 2020, the Principal Deputy Administrator for CMS Operations and Policy, Kimberly Brandt, informed Rabinowitz that the “senior Medicare team and General Counsel's Office” had reviewed the issue and agreed with Bennett. Rabinowitz Decl. ¶ 30; Compl. Ex. 5; Compl. Ex. 7. Undeterred, Rabinowitz continued to dispute CMS's position and eventually secured a meeting with high-level CMS officials, which took place on October 14, 2020. Rabinowitz Decl. ¶ 31; Compl. Ex. 7. Following that meeting, CMS Principal Deputy Administrator Demetrios Kouzoukas sent Rabinowitz a letter that confirmed Bennett's and Brandt's conclusions and reiterated CMS's position that Rabinowitz's “request is inconsistent” with the statutory foreign payments ban. Compl. Ex. 7.
Approximately four months later, RICU filed the present complaint alleging that HHS's determination that reimbursement of its services is barred by the foreign payment ban was arbitrary and capricious and contrary to the Telehealth Statute. See Compl. ¶¶ 86-97 (Count I), 98-108 (Count II). Simultaneously, RICU sought a preliminary injunction “enjoining [defendants] from denying Medicare reimbursement for telehealth services on the basis of a physician's or practitioner's physical location outside of the United States at the time of service.” Mot. for Prelim. Inj. (“PI Mot.”) at 40. HHS[1] opposed RICU's motion and moved to dismiss the complaint for lack of subject matter jurisdiction under Rule 12(b)(1) and for failure to state a claim under Rule 12(b)(6). See Def. Mot. to Dismiss & Opp. to Pl. Mot. (“Mot. to Dismiss”). The Court held a hearing on the motions on May 17, 2021, and they are ripe for the Court's resolution.
“A preliminary injunction is an extraordinary...
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