Opinion ID: 2824671
Heading Depth: 2
Heading Rank: 1

Heading: The bad debt moratorium

Text: Grossmont questions the validity of the mandatory state determination policy. According to Grossmont, the longstanding policy of the Secretary was an “alternative documentation” policy, under which hospitals had the burden to show that they were entitled to the Medicare bad debts claimed, but were not required to submit bills to the state Medicaid program. Grossmont contends that the alternative documentation policy was confirmed in 1995 when the Secretary issued instructions in the Provider Reimbursement Manual, Part II § 1102.3L, which stated that hospitals can document a state’s obligation for bad debts by supplying either a Medicaid remittance advice form or alternative documentation of the state’s lack of responsibility for payment. Even though § 1102.3L was deleted by the Secretary in 2003, it is Grossmont’s contention that the alternative documentation policy was in effect for the relevant time period, i.e., May 1994 through June 1998. It was not until a case decision in 2000, Grossmont asserts, that the Secretary sought for the first time to impose a mandatory state determination policy to limit the “alternative documentation” policy. See California Hospitals 91-91 Outpatient Crossover Bad Debts Group v. Blue Cross and Blue Shield Association/Blue Cross of California/Blue Cross of Omaha/ Aetna Life Insurance Company, Adm. Dec. (Oct. 31, 2000), JA 254–265. Grossmont argues that this attempt in 2000 to limit the application of the long-standing alternative documentation policy to the hospitals’ claims must be rejected as a violation of the statutory bad debt moratorium. The moratorium was enacted by Congress in 1987 and prohibits making any change to any policy in effect at the 7 time of its enactment with respect to bad debt payments. See Omnibus Budget Reconciliation Act of 1987, Pub. L. No. 100203, § 4008(c), 101 Stat. 1330. In short, Grossmont claims that the mandatory state determination policy violates the bad debt moratorium and therefore the policy is invalid. The district court refused to consider Grossmont’s Bad Debt Moratorium argument, finding that Grossmont waived the argument by failing to raise it in the administrative proceedings below. See Grossmont I, 903 F. Supp. 2d at 48. Grossmont argues that the district court erred in its finding because (a) the Secretary first raised the moratorium in her decision below, thus opening the door to the issue, (b) the Secretary did not object in the district court to Grossmont’s moratorium argument, thereby waiving any objection to Grossmont’s waiving it, and (c) the Secretary fully briefed the moratorium issue below. We do not find these arguments persuasive. We agree with the district court that this issue will not be considered now as Grossmont was required to “raise [the] issue with [the] agency before seeking judicial review.” ExxonMobil Oil Corp. v. FERC, 487 F.3d 945, 962 (D.C. Cir. 2007). Grossmont makes no claim to raising this issue in the administrative proceedings. We conclude that Grossmont has failed to preserve its challenge that the mandatory state determination policy violates the bad debt moratorium.