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Doctors’ Medicare Lawsuit|Rejected Over Jurisdiction

(CN) - A Washington, D.C., federal judge dismissed a lawsuit against Secretary of the Department of Health and Human Services Kathleen Sebelius over revised Medicare regulations.

The Council for Urological Interests claimed the Centers for Medicare and Medicaid Services (CMS) introduced new regulations that wrongly prevent joint ventures, through which urologists purchase medical equipment, from providing laser treatment to Medicare patients.

The urologists say joint ventures are necessary to buy expensive laser equipment that hospitals are reluctant to buy.

"Under CMS regulations, however, these joint ventures may not be directly reimbursed for their technical costs under Medicare, which covers over 75 percent of the patients who receive laser surgery," according to the ruling.

The original CMS regulations were passed in 1989 to stop physicians from referring patients to entities in which they held a financial interest.

To comply with the regulations, joint ventures arranged to have hospitals act as their Medicare billing agents, transferring fees to the joint ventures on a per-procedure basis after taking their cut.

The latest revisions to those regulations, which took effect on Oct. 1, 2009, ban the per-procedure payments because they create a prohibited financial relationship.

U.S. District Judge Henry Kennedy said the court did not have jurisdiction over the urologists' claim because they have not exhausted the CMS administrative claims process.

The urologists claimed they cannot present their claims directly to CMS because administrative channeling effectively denies review.

Kennedy agreed with the government that while the urologists themselves cannot present their claims to CMS, the partnering hospitals can.

The doctor and hospital would not be subject to CMS penalties for the submitting Medicare claims for services that they know are excluded from coverage if they submit claims that do not seek payment, according to the ruling.

At most the urologists face a "hardship resulting from a delay of judicial review," not an effective denial of review, Kennedy wrote (emphasis in original).

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