The October 2019 Allina Memo – an Echo of the 2018 Brand Memo?

Following a US Supreme Court decision in the Azar v. Allina Health Services case in June 2019 (Azar v. Allina Health Services 139S.Ct. 1804 (2019)], the Department of Health and Human Services (HHS) undertook an analysis of the decision on Medicare payment rules and compliance actions based on those payment rules.In a 3-page memo dated October 31, 2019, general counsel for HHS made recommendations what should or should not be done in considering enforcement actions.

The Supreme Court held in the Allina case that "under Social Security Act Section 1871, any Medicare issuance that establishes or changes a "substantive legal standard" governing the scope of benefits, payment for services, eligibility of individuals to received benefits, or eligibility of individuals , entities, or organizations to furnish services , must go through notice-and-comment rulemaking."

In the HHS Allina memo analysis CMS notes that payment rules may form the basis for enforcement actions. It is important that Centers for Medicare & Medicaid (CMS) conform its guidance documents to the rulemaking requirements set forth in Allina.If the guidance closely ties to statutory or regulatory requirements, enforcement actions can still be brought.However, if the guidance is not closely tied to statutory or regulatory standards, that guidance cannot be used in enforcement actions because it was not validly issued.

The HHS analysis also noted that Local Coverage Determinations (LCDs) by CMS contractors are not bound to use the notice-and-comment rulemaking as LCDs are not binding on HHS.However, government enforcement actions based solely on LCDs are generally unsupportable.

The HHS analysis is very similar to the January 2018 Brand memo frm the US Department of Justice (DOJ) that prohibits the Department frm issuing guidance documents that effectively bind the public without undergoing the notice-and-comment rulemaking process.The 2018 memo goes on to say that for Affirmative Civil Enforcement (ACE) cases—generally advanced in the form of False Claims Act cases—that DOJ may not use its enforcement authority to convert guidance documents into binding rules.

How do these memos help healthcare providers?In determining whether you have received an overpayment or have been denied benefits, look to the statutes and regulations. If the alleged overpayment is based solely on guidance documents not subject to formal rule-making, then that guidance, without more, fails to support an overpayment amount by the provider to Medicare.It is always important to consider consulting with an experienced health care attorney to ensure all aspects of your situation have been thoroughly reviewed and analyzed in detail.