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Healthcare Providers Waiting for a Hearing on Medicare Overpayment Cannot Delay Repayment

By Joseph Fawbush, Esq. on November 22, 2019

Medical providers often run into issues when submitting Medicare and Medicaid claims. While Medicare fraud is a very real issue that costs tens of billions to U.S. taxpayers per year, in some cases an overpayment can be attributed to error, rather than bad intent. And whether it involves alleged fraud or error, providers can appeal the determination of an overpayment.

A Significant Backlog in Administrative Hearings

While health care providers can contest the amount of overpayment, obtaining a hearing before an administrative law judge is a lengthy proposition. The Department of Health and Human Services (HHS) estimates there are over a billion Medicare claims per year it needs to process, meaning it takes several years to get a hearing.

One provider, Advantage Health, argued before the Fourth Circuit that being forced to pay back the Department of Health and Human Services prior to its hearing violated due process. The federal district court agreed and issued a preliminary injunction against HHS' collection efforts.

HHS had determined that Advantage Health owed over $6.6 million for claims made in 2010 and 2011. Advantage Health became the largest Medicare provider by amount in South Carolina yet did not have a corresponding increase in patients. In fact, one nurse often billed for more than 24 hours in a day, and throughout the entire year at issue never billed for less than 15 hours in a day. HHS began to recoup what it was owed by withholding payments for ongoing medical services.

Advantage Health, after losing this revenue source, now alleges it may go out of business shortly. It is contesting the amount it owes. They have a hearing scheduled with an administrative law judge in 2022.

4th Circuit: An Alternative Method Means You Get Due Process

The Fourth Circuit panel, in a unanimous opinion, held that the forced repayment did not violate Advantage Health's due process, because Congress has provided an alternative remedy for contesting overpayments by allowing providers to “bypass" the administrative law process, and instead get judicial review. Namely, under 42 U.S.C. § 1395ff(d)(3)(A), healthcare providers can get judicial review of their appeal in district court, if “the Departmental Appeals Board does not conclude its review within 90 days . . . or within 180 days if the appeal had been escalated past the ALJ level."

Advantage Health had chosen not to take this route for strategic reasons. But because it had this choice, the panel reasoned, it cannot complain that this choice denies it due process.

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