Three NAHC lawsuits target Medicare rulemaking process

By MATTHEW HAY

HHBR Washington Correspondent

The National Association for Home Care’s (NAHC; Washington) Center for Health Care Law (CHCL) has several lawsuits underway that challenge the Medicare program’s implementation of the interim payment system (IPS) and other matters that it says could extend beyond the specific issues they address and have a far-reaching impact on the Medicare program’s policy making process. NAHC believes that if it can prove the Health Care Financing Administration (HCFA; Baltimore) violated established rulemaking process in these cases, challenges could also be brought against the OASIS regulation as it applies to non-Medicare patients and any other regulatory action by HCFA that places an "unreasonable and unnecessary" burden on home care agencies.

Taken together, the suits reveal NAHC’s firm belief that HCFA is increasingly overstepping its rulemaking authority and bypassing established rulemaking requirements (see story, page 1). "We think the best solution to IPS problems lies with Congress," said NAHC President Val Halamandaris. "However, we also believe that HCFA has gone beyond the powers provided by Congress with these arbitrary regulations."

NAHC’s first lawsuit targets HCFA’s implementation of IPS mandated by the Balanced Budget Act of 1997. On Jan. 26, 1999, attorneys for NAHC filed a motion for summary judgment seeking a court order invalidating HCFA’s IPS regulations as "arbitrary and capricious" interpretations of Congressional intent. If successful, HCFA will be required to modify the limitations on reimbursement established by the BBA.

In its motion, NAHC charged HCFA with failing to fulfill its responsibilities under the Regulatory Flexibility Act (RFA), the Administrative Procedures Act, and Medicare law. Specifically, NAHC said that while Congress intended IPS to slow the growth of the home health benefit, HCFA’s regulations actually reduce expenditures from previous levels and severely restrict beneficiary access to home health services. According to NAHC, "HCFA’s own analysis indicates that home health agencies will be forced to subsidize the Medicare program by more than $3 billion in 1998 and 1999 as the result of the IPS payment limitations."

The motion for summary judgment is based largely on the claim that HCFA violated the RFA by failing to consider alternative regulatory options before publishing its regulations for IPS. The RFA requires agencies to undertake a comprehensive impact analysis before implementing new regulations and pursue alternative regulatory options that would reduce the burden on small entities such as home health agencies. NAHC argues that HCFA failed to consider several such alternatives including the restriction on inflation updates to both the per-visit limits and the per-beneficiary limits and refused to allow for legitimate exceptions to the per-beneficiary limits.

The government’s reply on this lawsuit is due this week, according to CHCL’s Bill Dombi, the lead counsel on the lawsuit.

Recoupments also targeted

CHCL is also preparing a national class action lawsuit challenging HCFA’s recoupment of overpayments resulting from implementation of the IPS. That claim points to a longstanding provision of Medicare law that allows recoupment of an overpayment to be waived if the provider is without fault in receipt of the overpayment. "That suit hasn’t been filed yet," Dombi told HHBR. "We are gathering the plaintiff’s facts right now." That suit will likely be filed in the U.S. District Court in Washington, DC.

In this lawsuit, NAHC is acting as a representative plaintiff on behalf of individual home health agencies acting as plaintiffs. Among the criteria established by CHCL for consideration as a plaintiff are the following: the agency received late notice of the per-beneficiary limits (The notice should be at least six months into the agency’s first fiscal year subject to the limits. NAHC says some home health agencies have yet to receive their limits for their first complete IPS year); the agency can demonstrate it took significant effort to reduce costs by managing both the per-visit cost of services as well as case managing clinical services to patients; and the agency is below its per-visit cost limit.

Homebound requirement also under challenge

On Dec. 18, 1998, CHCL also moved for summary judgment in its lawsuit challenging HCFA’s administration of the homebound requirement for the home health benefit. The center said it filed the lawsuit in response to the increasing frequency of homebound coverage denials issued by Medicare intermediaries. The plaintiffs in that lawsuit are Medicare beneficiaries with disabilities who have been or will be denied Medicare home health coverage on the basis that absences from the home disqualify them from meeting Medicare’s homebound requirement.

The center argued that HCFA’s application and interpretation of the homebound requirement denied Medicare beneficiaries access to healthcare services that they cannot "reasonably or appropriately" receive outside the home and that in the absence of these services the plaintiffs are bedbound. CHCL also argued that HCFA’s interpretation of the homebound requirement violates the law in that it leads to the assessment of eligibility after the provision of necessary home health services that are otherwise unavailable.

"The lawsuit itself is going after the timing of the homebound decision," Dombi explained. "We argue that you can’t take into consideration the services that would be covered under the program in determining whether the person is homebound before they even get the services. In other words, you can’t use post-qualification services to determine a pre-qualification condition.

"Right now, the case is pending cross-motions for summary judgments," Dombi reported. There was a slight delay because the government’s counsel became ill and had to be replaced. As a result, the time for HCFA’s reply brief was extended. "Hopefully, that will be done soon," said Dombi, "because it was overdue as of Jan. 15." Once that briefing is complete, there will be a hearing before the court. "I am hoping we can have a hearing and open argument on the motions sometime in April," he said.