On March 26, 2012, the U.S. District Court for the District of Columbia upheld the application of the Department of Health and Human Services’ (HHS) “must-bill” policy to two long term care providers attempting to collect Medicare reimbursement for bad debts incurred as a result of treating certain dual eligible patients. Cove Associates Joint Venture v. Sebelius, No. 1:10-cv-01316 (D.D.C. Mar. 26, 2012) [PDF]. Under the must-bill policy, a provider is required to bill its state Medicaid program for uncollectable coinsurance and deductible obligations associated with dual-eligibles before claiming payment for such costs as bad debt from Medicare. The policy also requires the provider to submit a state remittance advice as evidence that the state has refused payment. However, the court remanded the case to the CMS to determine whether the providers were justified in relying on CMS’ prior failure to enforce the must-bill policy with respect to dualeligible reimbursement claims from non-participating Medicaid providers.
The case involves two separate providers of skilled nursing and long term care hospital services (collectively, plaintiffs). The plaintiffs voluntarily elected not to participate in their respective state’s Medicaid programs, but they do admit dual eligible beneficiaries. The plaintiffs’ respective fiscal intermediaries denied a total of $574,348 of dual-eligible bad debt reimbursement for the 2004 and 2005 fiscal years, citing the must-bill policy and the plaintiffs’ failure to obtain a state remittance advice as the reason for denying reimbursement. The plaintiffs were unable to obtain a state-issued remittance advice, however, because the states refused to issue such advice to non-participating providers.
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