Opinion ID: 2766677
Heading Depth: 2
Heading Rank: 1

Heading: Collection Process

Text: HHS has long interpreted reasonable collection efforts to require billing those responsible for payment. See, e.g., Cmty. Hosp. of the Monterey Peninsula v. Thompson (Monterey), 323 F.3d 782, 796, 798 (9th Cir. 2003) (discussing the policy's history and enforcement); see also PRM §§ 310, 312, 322 (explaining the requisite collection efforts).5 Where patients are also eligible for Medicaid, the Secretary has historically required medical providers to submit proof that it billed the relevant Medicaid program but was denied payment. See Monterey, 323 F.3d at 796. This proof usually takes the form of an RA issued by the Medicaid 4 Bad debts from certain sources are reimbursable to ensure the costs of treating Medicare beneficiaries are not shifted to non-Medicare beneficiaries. 42 U.S.C. § 1395x(v)(1)(A) (prohibiting cost-shifting); 42 C.F.R. § 413.89(d) (same). 5 PRM § 310 explains that a provider's reasonable collection efforts to obtain deductible and coinsurance amounts must be similar to efforts to collect from non-Medicare patients, including the issuance of a bill . . . to the party responsible and other actions such as subsequent billings. PRM § 312 waives the PRM § 310 procedures for indigent patients for whom no source other than the patient would be legally responsible for the . . . bill. PRM § 322 explains that amounts the state Medicaid program is not obligated to pay can be included as bad debt . . . provided that the requirements of § 312 or, if applicable, § 310 are met. -5- program, reflecting the patient's eligibility, and payment (or nonpayment). See, e.g., PRM-II § 1102.3L (Rev. 4) (assuming that satisfaction of the Billing Requirement will be demonstrated through RAs). These two requirements -- which we denominate the Billing Requirement and the RA Requirement -- try to ensure that the claimed amounts are in fact bad debt not covered by the relevant Medicaid program. Some version of this must-bill policy has generally been enforced.6 From 1995 to 2003, however, the Secretary's manual permitted providers to substantiate crossover bad debt by submitting alternative documentation [i]n lieu of billing. See PRM-II § 1102.3L (Rev. 4). In March 2003, the Ninth Circuit held that this waiver of the Billing Requirement marked a change in bad debt reimbursement policy, violating the Congressional moratorium on such changes, and so could not be enforced. See Monterey, 323 F.3d at 798-99 & n.9. In response, the Secretary removed the offending language from the PRM, effective October 1, 2003. See 6 It is not clear that the consistently enforced version of the must-bill policy includes both the Billing Requirement and the RA Requirement. Cf. Grossmont, 903 F. Supp. 2d at 49, 52 (recognizing the must-bill policy as requiring billing, and discussing a distinct 'mandatory State determination' policy). The now-repealed language of PRM-II § 1102.3L suggests that HHS assumed that billing the state Medicaid program would generate a Medicaid RA, such that satisfaction of the Billing Requirement entailed satisfaction of the RA Requirement. See PRM-II § 1102.3L (Rev. 4) (Evidence of [crossover] bad debt . . . may include a copy of the Medicaid [RA] . . . . However, it may not be necessary for a provider to actually bill the Medicaid program . . . .). To avoid ambiguity, we refer to the two requirements separately. -6- Change Request 2796 at , 3. It is not clear that the Secretary ever permitted broad use of this alternative document billing provision. Compare Transcript of Proceedings at 142-43, Maine Med. Ctr., PRRB Dec. No. 2013-D3 (Nov. 29, 2011) (Nos. 06-1318, 07-1386) ([T]his Intermediary never followed the instructions . . . . [T]hey always required Medicaid [RAs].), and Monterey, 323 F.3d at 796-99 (suggesting not), with Cove Assocs. Joint Venture v. Sebelius, 848 F. Supp. 2d 13, 28-29 (D.D.C. 2012) (providing an example of a case where alternative documentation had been permitted). Regardless, the Secretary provided a grace period, issuing a memorandum instructing the Intermediaries that process claims to hold harmless providers who had relied on the provision in settling claims before January 1, 2004. See JSM-370. That memorandum, known as JSM-370, articulated both the Billing Requirement and the RA Requirement. See id. ([I]n those instances where the state owes none or only a portion . . . , the unpaid liability for the bad debt is not reimbursable . . . until the provider bills the State, and the State refuses payment (with a State Remittance Advice).). Maine Medical did not rely on this grace period for the alternative documentation.