Long-Term Care Providers Get New Look at Medicare Bad Debt Pay


September 21, 2021 2:42 pm

Eight long-term care providers will recover more Medicare money to satisfy bad debts because the federal government wrongfully reduced payments for years they weren’t enrolled in state Medicaid programs, a federal court said.

The Centers for Medicare and Medicaid Services, a part of the U.S. Health and Human Services Department, must reevaluate nearly $2 million in claims filed by providers operated by Select Medical Corp. in Alabama, Arkansas, Mississippi, Nebraska, and Wisconsin, the U.S. District Court for the District of Columbia said.

Allowing CMS to deny these payments based on perceived state Medicaid liability subjects the providers to a must-bill policy and remittance requirement based on participating in and billing state Medicaid programs that the court previously found unlawful, it said.

Seventy-five providers located in 26 states sued HHS to recover over $20 million in Medicare reimbursements covering poor patients’ bad debts for fiscal years 2005 to 2010.

In 2007, CMS began requiring providers to submit the bad debt claims to state Medicaid agencies and obtain a state remittance advice document to prove there was no other source of payment before it would reimburse the costs. This is known as the “must-bill” policy.

Several providers, however, weren’t able to comply with the policy because the Medicaid programs in their states didn’t allow long-term care providers to participate.

The court held the agency’s new policy violated administrative procedural rules because CMS didn’t submit the change to notice-and-comment rulemaking first. It sent the providers’ reimbursement claims back to CMS for reconsideration.

CMS agreed to pay most providers more than $18 million plus interest. But it denied reimbursement of nearly $2 million to the eight providers.

This decision ignored the court’s earlier determination that CMS may not withhold or reduce reimbursements for bad debts incurred while providers weren’t participating in state Medicaid programs, the court said Monday in an opinion by Judge Beryl A. Howell.

Howell sent the providers’ claims back to CMS.

The agency may reduce or withhold payment for bad debt claims made after the providers enrolled in state Medicaid programs, she said.

Law Offices of Jason M. Healy PLLC represented the hospitals. The U.S. Department of Justice represented the HHS.