On March 27, 2018, the Fifth Circuit ruled in Family Rehabilitation, Inc. v. Azar that a home health provider, Family Rehabilitation, Inc. ("Family Rehab"), could sue in federal court to suspend Medicare's recoupment of approximately $7.6 million in alleged overpayments, without first exhausting the backlogged, "Byzantine four-stage administrative appeals process."
Family Rehab, like many other healthcare providers, was in the process of challenging a large overpayment at the ALJ level, as they had received unfavorable results at appeal levels 1 and 2. The current administrative process allows for providers to hold off the recoupment process until appeals have been exhausted at both the Redetermination and Reconsideration levels. If the Reconsideration decision (2nd level) is unfavorable, providers are required to refund the overpayment plus interest, when applicable, within 30 days or establish an Extended Repayment Plan, to avoid referral to the US Treasury Department.
Unfortunately, with the ALJ currently facing a backlog of over 500,000 appeals pending, the average processing time for a hearing is 1,214 days. With long processing times, and no reimbursement monies coming from Medicare, providers are finding themselves in comprising positions financially. In some instances, the cost of sustaining a business while repaying the overpayment, or being offset, while awaiting a hearing with an ALJ has resulted in some providers closing their doors.
While it is still unclear how this decision will affect other providers awaiting an ALJ hearing, it may provide hope for those facing a large recoupment and little relief.