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Category: Appeals

Supreme Court Grants Review of Part A Appeal

 
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Court Grants Government’s Motion to Remand Part C Cases Post-Allina II

Service Line Contact: 
Karen Kim, Vice President Appeal Services  karen.kim@toyonassociates.com 888.514.9312

 

 

This week, the DC District Court granted the Secretary of Health and Human Services motion for voluntary remand of all cases related to Azar v. Allina Health Services, 139 S. Ct. 1804 (2019) (“Allina II”).

 

 
Details
As you may know, Toyon has been helping Providers in appealing HHS’s decision to arbitrarily include Part C days in the Medicare fraction between 2004 and 2012, on the grounds that only Medicare Part A days should be included in the SSI ratio and that dual eligible Part C days belong in the numerator of the Medicaid ratio.
 
Last year, the Supreme Court in Allina II ruled in favor of our Providers, holding that HHS violated its rulemaking obligations by including Part C days in the Medicare fraction between 2004 and 2012. This court ruling should have resulted in CMS restoring the status quo and reinstating HHS’s prior-to-2004 policy (wherein Part C days were NOT included in the Medicare fraction) and distributing substantial additional DSH reimbursement to Providers.
 
Instead, HHS had requested voluntary remand of the cases to the agency to “re-examine these claims in light of [Allina II] and take further action as necessary to comply with the applicable legal standards announced therein.” Providers opposed remand and pushed the court to instead vacate the agency’s “invalid determinations” and enter judgment “with instructions to promptly pay the hospitals any additional DSH payments due,” pursuant to the Allina I and II decisions.
 
The Court on Tuesday ruled in HHS’s favor, stating that the agency has “already begun further action to address the Allina II decision,” and so the Court thought remand appropriate to allow the agency “to cure its own mistakes.” A copy of the Court’s order can be found here.
 
What this means to you
Unfortunately, the agency’s attempt to “address the Allina II decision” as referenced by the Court was publication of a proposed rule in August 2020 wherein CMS stated it would “adopt the same policy of including Medicare Advantage patient days in the Medicare fraction that was prospectively adopted in the FY 2014 IPPS/LTCH PPS final rule and to apply this policy retroactively to any cost reports that remain open for cost reporting periods starting before October 1, 2013.”
 
Thus, for many reasons, including the delays it would cause, our attorneys fought against the voluntary remand. The agency’s proposed rule and request for remand show that HHS likely plans to leave the problematic policy intact and to refuse correcting the illegal payment determinations for Providers.
 
What now?
Toyon is working with our attorneys (Ropes & Gray) to determine a strategy for next steps. We will provide you with additional updates as this matter unfolds.
 
Please contact Karen S. Kim at (925) 685-9312 or karen.kim@toyonassociates.com if you have any questions or concerns.
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CMS Publishes Rule in apparent response to Allina II Ruling

Last week, CMS published a proposed rule on the treatment of Medicare Advantage (MA) Part C days for discharges prior to October 1, 2013, related to the Medicare DSH calculation.

This proposed rule is purportedly CMS’s long awaited response to the United States Supreme Court’s ruling in Azar v. Allina Health Services, 139 S. Ct. 1804 (2019) (“Allina II”), wherein the Supreme Court upheld a lower court ruling that HHS violated the Medicare Act when it changed its DSH reimbursement formula without providing notice and opportunity for comment. 
 
As you know, HHS arbitrarily began including Part C days in the Medicare fraction through its 2004 Final Rule, and Toyon has been helping Providers in appealing the agency’s actions on the basis that only Medicare Part A days should be included in the SSI ratio and that dual eligible Part C days belong in the numerator of the Medicaid ratio. While the Supreme Court in Allina II did not rule on the merits of Providers’ position, it did rule that HHS violated its rulemaking obligations by including Part C days in the Medicare fraction between 2004 and 2012. This court ruling should have resulted in CMS restoring the status quo and reinstating HHS’ prior-to-2004 policy (wherein Part C days were NOT included in the Medicare fraction). Such actional would have resulted in substantial additional DSH reimbursement to Providers. 
 
What it Means to You
Instead, CMS’s proposed rule, published August 6, 2020, states that CMS proposes to “adopt the same policy of including MA patient days in the Medicare fraction that was prospectively adopted in the FY 2014 IPPS/LTCH PPS final rule and to apply this policy retroactively to any cost reports that remain open for cost reporting periods starting before October 1, 2013.” This proposed rule is tantamount to CMS simply disregarding the Supreme Court Allina II ruling in favor of Providers, as the 2014 Final Rule applies CMS’s same flawed policy of including Part C days in the SSI ratio for FYEs 2004-2012. CMS alleges it has the authority to apply this rule retroactively under the guise that it is in the ”public interest.” 85 Fed. Reg. 47,723; 47,725-56 (Aug. 6, 2020).
 
What now?
Our attorneys (Ropes & Gray) filed a response in the US District Court for the District of Columbia on Friday, objecting to HHS’s proposed rule and requesting the Court entertain further briefing and hearings on HHS’s motion requesting remand of the cases to the agency. A copy of the response is linked here. We will provide you with additional updates as this matter unfolds.
 
Please contact Karen S. Kim at (925) 685-9312 or karen.kim@toyonassociates.com if you have any questions or concerns. 
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