CMS Revokes Billing Privileges for Competitive Bid Supplier

23 January 2017 Health Care Law Today Blog

The Centers for Medicare and Medicaid Services (CMS) has demonstrated that it will not hesitate to use one of its most crippling administrative enforcement tools—the revocation of Medicare billing privileges—against one of its largest suppliers, as is evident in its case against Arriva Medical, LLC. Medicare billing privileges may be revoked for any one (or more) of several grounds laid out in the regulations at 42 C.F.R. § 424.535. In this case, CMS relied upon 42 C.F.R. § 424.535(a)(8), “abuse of billing privileges,” and specifically subsection (i)(A), regarding the submission of a claim for an item or service that could not have been furnished to a specific individual on the date of service because the beneficiary was deceased.

A revocation of billing privileges precludes payment for any claims submitted after the effective date of the revocation, and is accompanied by a ban on re-enrollment. A revocation has much the same impact as an exclusion imposed by the Department of Health and Human Services (HHS) Office of Inspector General (OIG), i.e., no Medicare payment, and in some cases revocations have been imposed after OIG declined to exclude an individual or entity.1 A Medicare revocation can also result in similar actions under Medicaid.

Arriva provides diabetic testing supplies under Medicare’s competitive bidding program, and describes itself as the nation’s largest supplier of home-delivered diabetic testing supplies.2 In October 2016, Arriva was notified by CMS that its billing privileges would be revoked, effective November 4, 2016, with a three year ban on reenrollment, due to the submission of Medicare claims for deceased beneficiaries. On December 6, 2016, Arriva was notified that its competitive bidding contract would be terminated effective January 20, 2017, based upon its lack of Medicare billing privileges.

Arriva filed for administrative review of the revocation of its billing privileges, an appeal that as of this writing is pending with the Departmental Appeals Board (DAB), and filed for a temporary restraining order and injunctive relief in light of the upcoming deadline for termination of its competitive bid contract. In its filing, Arriva alleged that the revocation was based upon 211 claims (0.003%) for supplies shipped to beneficiaries after they had died, out of approximately 5.8 million claims over a five-year period.3 Arriva further noted that CMS found concerns with the supporting claims documentation for 47 of those 211 beneficiaries. However, Arriva argued that any errors in billing for these claims after the beneficiary died were primarily the result of Medicare system flaws, and the revocation itself was related to the backlog of claims appeals before the Office of Medicare Hearings and Appeals.

Defendants (HHS) responded by filing an Opposition to Plaintiff’s First Application for Temporary Restraining Order (TRO) and Preliminary Injunction and Motion to Dismiss Plaintiff’s Complaint (Defendants’ Opposition), in which it was reported that CMS had advised Arriva that CMS was willing to defer the termination of the competitive bidding contract until such time as the DAB rendered the final agency decision on the revocation. Defendants’ Opposition notes that several courts have addressed revocation actions imposed by CMS, including allegations of imminent and irreparable harm, and have dismissed the complaints for lack of jurisdiction. Here, HHS again argued that administrative exhaustion is required before revocation disputes can be heard by a court. Moreover, HHS argued that a post-deprivation avenue for appeal did not violate the supplier’s due process rights, with a lengthy discussion of case law on this issue. Defendants’ Opposition also includes a lengthy discussion of Defendants’ view on the standard for granting a TRO, including arguments that the case law does not support a finding of “irreparable harm” for health care entities even against allegations that they might have to shut down as a result of the challenged action.

By minute order entered on January 4, 2017, the request for a TRO was denied, with the court setting a schedule for plaintiff to file a renewed motion for preliminary injunction and for defendant to file an opposition to that motion as well as a motion to dismiss. The hearing on both motions is currently scheduled for February 8, 2017.

This case should be closely watched for its evaluation of CMS’ revocation authorities.

Originally, this post was an alert sent to the American Health Lawyers Association’s (AHLA) Regulation, Accreditation, and Payment Practice Group Members. It appears here with permission. For more information, visit AHLA’s website.


1 For a discussion of the difference between exclusions and revocations, see Desfosses v. Noridian Healthcare Solutions, LLC, 2015 WL 1196018 (Mar. 16, 2015).

2 Complaint for Declaratory and Injunctive Relief, Arriva Medical, LLC v United States Department of Health and Human Services, Case No. 1:16-cv-02521-JEB (D.D.C.).

3 Id.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Insights

A Review of Recent Whistleblower Developments
19 July 2019
Legal News: Whistleblower Developments
Cloud security inadequate for Cyber threats, are you surprised?
19 July 2019
Internet, IT & e-Discovery Blog
Blockchain: A Tool With a Future in Healthcare
18 July 2019
Health Care Law Today
Do You Know What IMMEX Stands For?
16 July 2019
Dashboard Insights
Review of 2020 Medicare Changes for Telehealth
11 December 2019
Member Call
2019 NDI Executive Exchange
14-15 November 2019
Chicago, IL
MAGI’s Clinical Research Conference
29 October 2019
Las Vegas, NV
Association for Corporate Counsel Annual Meeting 2019
27-30 October 2019
Phoenix, AZ