Administrative Procedure Act: Medicare, Medicare Advantage and Prescription Plans Must Follow its Regulations

With Chevron Deference being overturned, stakeholders facing conditional payment demands or payment denials by Medicare have a better chance of success in challenging Medicare’s decision.

Federal district court review of a Medicare decision generally applies when the appealing party has exhausted the administrative process. This usually means that the party has appealed a redetermination to the Qualified Independent Contractor (QIC), Administrative Law Judge (ALJ), and Medicare Appeals Council (MAC).

If this process is exhausted, a federal district court judge is required to apply the Medicare Secondary Payer Act’s “Reasonable Expectation of Payment and Demonstration of Responsibility Standards”, which ideally applies the law to the facts of the individual claim as it would be without regard to Medicare.

While the administrative appeal process usually runs smoothly, there is a percentage of cases where Medicare may not be applying the regulations appropriately. For example, a party has a right to a redetermination or a revised initial determination under reopen regulations, 42 C.F.R. 405.928(b), (emphasis added):

(b) An initial determination described in §405.924(b) is binding upon all parties to the initial determination unless –

(1) A redetermination is completed in accordance with §405.940 through §405.958;

                                                             or

(2) The initial determination is revised as a result of a reopening in accordance with §405.980.

A reopen request offers longer timeframes for filing than the standard redetermination process. If Medicare is applying the wrong time frame to a reopen request, Medicare may be violating federal regulations.

Medicare is required to follow the above regulations and more under the Administrative Procedure Act ^[1]. This means that if an appealing party can point to a regulation, which they believe Medicare is not following, there may be an opportunity to obtain federal district court review of the issue.

Exhausting the administrative appeal process may look different in these circumstances and end sooner with the initial contractor or the QIC. This is partly because the dispute is over Medicare’s regulations and not the merits of the appeal.

Medicare Advantage (MAP) and Prescription Plans
The Administrative Procedure Act also applies to these plans. However, the regulations for these plans are outlined separately from those of traditional Medicare.

With Chevron being overturned, there also may be an opportunity for appealing parties to force a MAP or Prescription Plan to follow the regulations as required by the Administrative Procedure Act.

We recently were made aware that some MAPs in the industry do not believe a carrier/self-insured has a right to an administrative appeal process. It is their position that only a beneficiary has the right to an administrative appeal process.

However, there may be a requirement for MAPs and Prescription Plans to offer carrier/self-insured access to their administrative appeal process. While not specifically outlined in the MAP regulations, 42 C.F.R. 405.904(b) provides non-beneficiary appellants, such as carriers/self-insureds, with the same rights of appeal.

This means if an MAP or Prescription Plan is seeking reimbursement directly against a carrier/self-insured, the same opportunity to have a QIC, ALJ, MAC and federal district court review should also apply. Failure by these plans to offer an appeal process to carriers/self-insureds creates an opportunity for abuse and little oversight over the collection process for conditional payments.

Every conditional payment claim, or denial of payment, brings its own nuances. So, if you have questions about the Administrative Procedure Act and/or would like to learn more about our conditional payment solutions, please contact our Settlement Consulting team at [email protected].

^[1] See 5 U.S.C. 704 and 706