The 5th Amendment is Not Dead Yet – Courts Order Medicare to Stop Recouping Alleged Over-payments Without Due Process

A lifetime ago, when I was a young faculty member at the University of Texas Healthcare system in Houston, I received a letter (yes, an actual PAPER letter) from my regional Medicare Administrative Carrier (MAC) – which back then we called a “fiscal intermediary” (FI) – that hyperbaric oxygen therapy services has been paid “improperly” for 11 patients and the money would have to be repaid IMMEDIATELY (I think we had 30 days). AFTER the hospital repaid the money, the FI’s decision could be appealed. I can’t remember the year, but I think it was about 1992.

I knew nothing about reimbursement back then because I had been the Medical Director of a hyperbaric facility for only about two years. However, in addition to the fact the money had to be repaid PRIOR to the appeal of the ruling, the original monetary sum typed onto the letter had been painted over with “white out,” and a different amount of money (which was a six figure sum) had been hand-written in the letter.

I quickly learned all I could on the Medicare appeals process. I notified the FI that the hospital was not paying any money on the basis of a letter the veracity of which I could not ascertain (due to the white-out correction), that the hospital attorney was investigating the matter, and that I was appealing their decision. I reviewed the 11 charts and decided my documentation was poor in one of the cases so I didn’t appeal that one. However, I “appeared” via telephone at a hearing before of an Administrative Law Judge (ALJ) a few weeks later on the other 10 patients. All 10 of those were overturned in favor of the hospital, and that’s how my interest in Healthcare policy began.

I might not become a lifelong activist for greater transparency in Medicare policy if it hadn’t been for two things:

  1. The “white out” on the letter that appeared to allow the FI to demand payback of virtually any amount of money they wanted, and,
  2. The fact that they demanded repayment BEFORE the opportunity to appeal. My first thought was, “Wait a second, this is AMERICA and we have due process!” Due process is (or was) a universal guarantee, enshrined in the Fifth Amendment to the United States Constitution. It’s the cornerstone of our society – one not limited to for matters involving criminal prosecution. Due process is, or at least it used to be, a reasonable expectation in procedural matters.

It has never seemed right to me that Medicare did not have to allow due process when it came to demanding repayments. My own great state of Texas has provided some hope for due process that seems to be spreading. Texas courts have granted a provider’s request for a Temporary Restraining Order (TRO) to prevent the Centers for Medicare and Medicaid Services (CMS) from recouping monies until after Administrative Law Judge (ALJ) hearings have been held. Now it appears that North Carolina courts are coming along.  I follow the blog of Knicole Emanuel, a partner with the Potomac Law Group and an expert on Medicare regulations. Check out her informative post on this subject. I don’t know if this ruling has any implications for hospitals or practitioners receiving demand repayment notifications under other audit programs (e.g. Targeted probes), but the legal argument is interesting. Last month it looked like the 5th Amendment was one of the carcasses being carried out to the Monty Python leftist plague wagon, but apparently, it’s not quite dead yet.