Health Law Daily Imperfect supporting records not sufficient basis for recouping Medicaid funds from nurses
Monday, July 13, 2020

Imperfect supporting records not sufficient basis for recouping Medicaid funds from nurses

By Jeffrey H. Brochin, J.D.

State agency’s recoupment policy enforced against nurses to recoup payments made for services they actually provided to Medicaid patients, but whose supporting records were not perfect, exceeded the agency’s authority.

In reversing the state appellate court, the Supreme Court of Wisconsin agreed with a circuit court that granted summary judgment for declaratory and injunctive relief to a nurses’ association that challenged the state Department of Health Services’ (DHS) recoupment policy. The Supreme Court agreed with the circuit court that recoupments of already-paid Medicaid reimbursements made to in-home nurses merely on account of technical deficiencies in their supporting records exceeded the agency’s authority (Papa v. Wisconsin Department of Health Services, July 9, 2020, Ziegler, J).

Reimbursement and recoupment. Professional Homecare Providers, Inc. (PHP) is a non-profit professional organization for independent nurses who are certified Medicaid service providers and who provide in-home care. When PHP nurses provide care for Medicaid patients, the nurses are reimbursed by Wisconsin's medical assistance program. Several PHP nurses who were audited by the state’s OIG were faced with DHS recoupment orders directing them to re-pay tens of thousands of dollars in Medicaid reimbursements due to their supporting records "not being perfect." DHS justified the recoupment orders based on a statue that provided that DHS ‘shall’ recover money improperly or erroneously paid or overpayments to a provider.

The independent Medicaid nurses challenged the agency’s authority to recoup for minor records infractions, and the circuit court agreed, invalidating the Perfection Policy and entering summary judgment in their favor. However, the appellate court reversed the circuit court and the instant consolidated appeals to the state Supreme Court ensued.

Un-promulgated administrative rule. PHP argued that the Perfection Policy was unlawful under state law because it was an un-promulgated administrative rule. Alternatively, PHP argued that the Perfection Policy was an invalid guidance document, and that regardless of whether it constituted a rule, a guidance document, or neither, it was unlawful because it exceeded DHS's statutory recoupment authority.

DHS countered that its authority was granted under Topic #66 of the DHS Medicaid Provider Handbook that states that services must meet all applicable program requirements, which include documentation.

Statement of general policy at issue. The court began its analysis by noting that the complaint itself consistently referred not to Topic #66, but to a "statement of general policy," and that PHP alleged that DHS' policy was that any compliance imperfection caused the services to be "non-covered" and therefore an overpayment. Accordingly, the complaint alleged that DHS's recoupment policy required perfection and exceeded DHS's actual recoupment authority. The complaint was therefore not limited to Topic #66, which was just an example of DHS' recoupment policy.

The court further clarified that the proper inquiry was whether the Perfection Policy exceeded DHS's recoupment authority, and that it did not need to decide whether the Perfection Policy was a rule or a guidance document. The complaint clearly alleged that the Perfection Policy was in excess of DHS's recoupment authority, and DHS could not adopt a Perfection Policy if that policy was in excess of its recoupment authority.

Court’s conclusions. The court concluded that DHS was authorized to recoup Medicaid payments from service providers only in cases where DHS could not verify one of the following: (1) the actual provision of covered services; (2) that the reimbursement claim was appropriate for the service provided; or (3) that the reimbursement claim was accurate for the service provided. The court further held that DHS's recoupment policy exceeded its recoupment authority, because Wisconsin statute prohibits an agency from enforcing standards not required or permitted by statute or rule. Accordingly, the court held that DHS could not implement nor enforce the Perfection Policy.

The cases are Nos.: 2016AP2082 & 2017AP634

Attorneys: Diane M. Welsh (Pines Bach LLP) for Kathleen Papa and Professional Homecare Providers, Inc. Steven C. Kilpatrick, Office of the Attorney General, for Wisconsin Department of Health Services.

Companies: Professional Homecare Providers, Inc.; Wisconsin Department of Health Services

MainStory: TopStory CMSNews AuditNews MedicaidNews MedicaidPaymentNews WisconsinNews

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