California Medicare Appeal Applies Strict Standing Rules

The Medicare Part B appeal process is lengthy and cumbersome, typically requiring full exhaustion of administrative remedies, including an administrative request for reconsideration, an ALJ hearing and Departmental Appeals Board review.  The process is especially frustrating when the appeal involves a challenge to a Local Coverage Determination (“LCD”), likely to have spawned several individual appeals of the same decision.

The Medicare Act does provide a shortcut to a legal review by way of 42 U.S.C. § 1395ff(f)(3) which provides that a Medicare recipient “may seek review [of an LCD] by a court of competent jurisdiction without  … otherwise exhausting other administrative remedies.”  This direct access to court review applies only if “there are no material issues of fact in dispute, and the only issue of law is the constitutionality of a provision of this subchapter or that a regulation, determination or ruling by the Secretary is invalid.”

In a recent District of Columbia decision, California Clinical Laboratory Association v. Secretary of HHS, the Association and an individual patient challenged a LCD precluding reimbursement for pharmacogenomics testing by clinical labs.  (Pharmacogenomics testing anticipates a medication’s effect on a patient based on genetic makeup.)  The plaintiffs by-passed any administrative appeal procedures, seeking relief directly from the court under section 1395ff(f)(3).

The court dismissed the complaint for lack of subject matter jurisdiction, holding that only the individual patient potentially had standing because section 1395ff(f)(3) only permits the Medicare “recipient”, not the “provider”, to bring the court action.  As to the patient, the court found that the complaint failed to allege injury-in-fact because the patient had actually received the testing and there was no allegation that the patient had been billed or required to pay in the absence of Medicare reimbursement.  Moreover, the court pointed out that the patient could not have been required to pay for the testing because she had not been provided with an “Advance Beneficiary Notice” (“ABN”) stating that Medicare may deny reimbursement, notwithstanding the LCD that such testing was not a covered service.

This case reveals that both providers and litigants must pay attention to detail in the area of Medicare reimbursement.  Providing a service subject to a LCD that will deny payment should be accompanied by an ABN to set up the possibility of appeal.  In deciding the appeal route, expect that attempts to avoid the administrative process will be viewed with suspicion and evaluated strictly for compliance with all aspects of the available procedure, such as section 1395ff(f)(3).

Failure to satisfy all requirements may lengthen the appeal process and force the patient and provider to return to the administrative process after having expended time, money and effort on a fruitless direct appeal.


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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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