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Tag: Appeals

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

Service Line Contact: 
Karen Kim, Vice President Appeal Services 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”).


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 if you have any questions or concerns.
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Good News from the Ninth Circuit Court of Appeals

Last week, providers won a major victory at the Ninth Circuit Court of Appeals relating to the government’s inclusion of non-covered Medicare Part A days (such as exhausted benefit days and Medicare Secondary Payer days) in the SSI Ratio of the Medicare DSH payment calculation. The Court held in favor of providers that the 2005 Rule promulgated by the Secretary of Health and Human Services be vacated on the grounds that the rule is “substantively invalid.” (Empire Health Foundation v. Azar, Case 18-35845).

Ninth Circuit Holds ‘Entitled’ Does Not Mean ‘Eligible’
The Empire Court found HHS’s implementation of the 2005 Rule, wherein HHS arbitrarily included non-covered Medicare Part A days in its calculation of the SSI Fraction, to directly conflict with the Ninth Circuit’s longstanding interpretation of the meaning of “entitled to [Medicare].” The Ninth Circuit in 1996 interpreted the meaning of the words “entitled” and “eligible” in another appeal. (Legacy Emmanuel Hospital and Health Center v. Shalala, 97 F. 3d 1261, 1265-66 (9th Cir. 1996)). According to the Legacy Emmanuel Court, “entitled” means the patient has an “absolute right . . . to payment,” whereas the word “eligible” means the patient “simply meets the Medicaid statutory criteria.” Because the Ninth Circuit’s interpretation of the word “entitled” is unambiguous, HHS’s decision to treat the words “entitled” and “eligible” as having the same meaning directly contravenes the Ninth Circuit’s interpretation of the statute and “cannot stand,” according to the Empire court.
What It Means To You
Toyon Associates, Inc. has been helping Providers in appealing the agency’s implementation of the 2005 Rule relating to non-covered Part A days. Toyon’s position has consistently been that non-covered Part A days should be excluded from the SSI Fraction and the portion of those days that are dual eligible be included in the numerator of the Medicaid fraction. 
While the Ninth Circuit decision is a great win for providers who have this issue under appeal, the decision is not yet final. HHS has 45 days from the date of the decision to request en banc review or appeal to the Supreme Court, and there is no reason to believe HHS would decline to fight this appeal further. However, in anticipation of this positive ruling, Toyon has engaged the same attorney who prevailed in the Empire Health Foundation case and is actively working to move all its pending Medicare Part A appeals into court so as to position providers in the best situation to benefit from this positive ruling.

What Now?
Providers will need to wait to see how HHS responds to the Ninth Circuit’s ruling but be prepared to move their appeals forward. Toyon will be contacting affected hospitals in the coming weeks as necessary, as more details become available on this issue.

Please contact Karen S. Kim at (888) 514-9312 or if you have any questions or concerns.

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