This approach was recently used by a Florida home health agency which was in Chapter 11. In that case a bankruptcy court ruled, over HCFA's objection, that the HHA could sell its medicare provider number free and clear of HCFA's overpayment claims. The court also noted that the buyer was experienced in providing home care services, and had the financial resources to consummate the sale on an expedited basis. It is not clear to what extent other bankruptcy courts will follow the ruling of the Florida court. What is clear is that the bankruptcy judges have a great deal of discretion in deciding such issues and that the outcome of each case will be highly dependant on the specific facts.
Courts also are reluctant to defer to the administrative appeal process because it can take years.
Ordinarily, a home health agency does not have much leverage with HCFA due to HCFA's right to withhold current payments. But the filing of bankruptcy may hamper HCFA's ability to withhold current payment, and create an incentive for HCFA to negotiate with the agency. Even the mere threat of filing bankruptcy may put the agency in a better bargaining position and enable it to obtain a longer repayment plan pursuant to HCFA's own regulations, or reach some other work-out agreement. Due to the short time frames involved once an overpayment notice is received, agencies that believe they will have problems repaying IPS overpayment notices should start considering all their options immediately. As briefly explained in this article, there are a number of approaches to consider.