Reopening Medicare Reimbursement Review Bars Later Agency Appeal


September 20, 2021 2:39 pm

A North Carolina hospital unhappy with the relief it received after asking a Medicare contractor to reopen a reimbursement decision is barred from seeking formal agency review because it voluntarily withdrew its first appeal, a federal court said Monday.

A Provider Reimbursement Review Board rule forbidding a second formal appeal when the first has been withdrawn didn’t deprive FirstHealth Moore Regional Hospital of its appeal rights because FirstHealth opted to go through the reopening process, the U.S. District Court for the District of Columbia said.

“This case offers a cautionary tale to any provider navigating the ‘labyrinthine world of Medicare,’” as FirstHealth based its strategy on the misunderstanding that the rules allowed it to reinstate its formal appeal after the reopening process ended, the court said.

A Medicare contractor determined that FirstHealth owed the government about $1.45 million for overpayments for fiscal year 2011. The hospital filed a formal appeal with the PRRB, but then withdrew the appeal after it asked the contractor to take another look at its reimbursement for uncollectible patient debts.

After reopening the case, the contractor allowed reimbursement for some previously denied bad debts, but not others. FirstHealth thus was eligible to receive an additional $833,000, reducing the amount it was required to repay to the U.S. Health and Human Services Department.

FirstHealth then tried to revive its PRRB appeal, but the board denied reinstatement. The court granted summary judgment to HHS in an opinion by Chief Judge Beryl A. Howell.

Under the PRRB’s withdrawal rule, it’s “the provider’s responsibility to withdraw” any issue a contractor has agreed to review from the appeal, the court said. FirstHealth argued the provision is mandatory and, thus, unlawfully deprived the hospital of its appeal rights.

The PRRB, on the other hand, argued the provision isn’t a command. A provider’s withdrawal of its appeal is entirely voluntary, it said.

The court found both readings of the provision to be reasonable. But the ambiguity gave the advantage to the PRRB because an agency’s interpretation of its own regulations is entitled to deference, the court said. PRRB’s interpretation, moreover, was reasonable, it said.

FirstHealth opted to pursue the reopening process, when it could have continued with the formal appeal, the court said. It wasn’t “forced” to give up its appeal rights at any point, it said.

Law Office of Joseph D. Glazer PC represents FirstHealth. The U.S. Attorney’s Office for the District of Columbia represents HHS.

The case is FirstHealth Moore Reg’l Hosp. v. Becerra, D.D.C., No. 20-cv-1007, 9/20/21.