Court Tosses Challenge to Medicare Reimbursement

(CN) - Medicare has no duty to reimburse therapy providers for uncollectible deductibles and co-pays, the D.C. Circuit ruled.

The court upheld a decision by the secretary of the Department of Health and Human Services (HHS) to deny reimbursement for certain "bad debt" costs, or deductibles and co-pays that service providers were unable to collect from patients or state Medicaid programs.

The decision was in line with the Balanced Budget Act of 1997, which scaled back reimbursement from a "reasonable cost" system - which allowed reimbursement for bad debts - to a system based on a preexisting Medicare fee schedule.

In 1999, a group of skilled nursing facilities submitted their cost reports to Medicare, including a list of their uncollectible deductibles and co-pays, but the HHS secretary refused to reimburse the bad debts.

The therapy providers challenged the decision, claiming it violated Medicare law and regulations.

The government won in district court, where a federal judge called the secretary's interpretation a "reasonable construction of the regulations."

The federal appeals court in Washington, D.C., affirmed, saying it was "perfectly sensible" for the secretary to view the bad-debt provision as applying only to the pre-1997 reimbursement system.

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