Court grants rehab provider relief while awaiting Medicare appeals

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A federal court has ruled a healthcare provider can sue to prevent a Medicare contractor from “clawing back” millions of dollars in suspected overpayment, a move that might otherwise send the business into bankruptcy.

Family Rehabilitation Inc. provides home healthcare in Texas, with up to 94% of its clients receiving Medicare-reimbursable services.

It faces an assessment of $7.6 million in Medicare overpayment, based on a sample audit of 43 claims that had significant documentation issues. But Family Rehabilitation filed an administrative appeal challenging the audit's findings.

Typically, companies must wind their way through the Centers for Medicare & Medicaid Services' four-tiered appeals process before heading to court.

But Fifth Circuit Court of Appeals Judge Jerry E. Smith ruled Tuesday that the requirement may be unconstitutional because more than 600,000 cases are stalled before administrative law judges. He said it could take three to five years for the company's claims to reach the appeal's next stage thanks to “Medicare's Byzantine four-stage administrative appeals process.”

The decision won't allow providers to resolve their administrative appeals in court but could prevent MACs from trying to recoup funds during other ongoing appeals.