HHS Can't Delay Medicare Appeals Backlog Case While Backlog Worsens

The Department of Health and Human Services (HHS) won't be able to push off litigation over its overwhelming backlog of Medicare appeals, a federal court ruled on Monday.  The HHS had asked the Court to stay the litigation, which was filed by the American Hospital Association and three other hospital organizations, until Sept. 30, 2017. HHS asked for the delay to allow the agency to move ahead on administrative and legislative efforts designed to tackle the backlog of more than 700,000 appeals, including implementation of a set of strategies proposed as recently as June.

The U.S. District Court for the District of Columbia's denied HHS' motion to stay the litigation, after describing the agency's proposed fixes as “impressive-sounding action items” that won't do much to curb the backlog as it grows to more than 1 million appeals in fiscal year 2020."  Judge James E. Boasberg wrote:  

“The best medicine can sometimes be hard to swallow,” wrote  “... the backlog and delays have only worsened since [HHS] first sought the Court's help, and the Secretary's proposed solutions are unlikely to turn the tide.”  

In denying the HHS' request, the court nonetheless turned down the hospital groups' request that the Court order the agency to resolve the appeals.     The Court explained that:

“[t]he Court, however, does not possess a magic wand that, when waved, will eliminate the Backlog.  Plaintiffs' suggestion that the Court simply order HHS to resolve each of the pending appeals by the statutorily prescribed  deadlines is extremely wishful thinking."

Of course, among the proposed strategies, one will not find a reversal of HHS opposition to lawful home health care and hospice care.  In other words, HHS appears satisfied with strategies designed to reduce the backlog of cases, but unwilling to reverse the positions that cause the backlog of cases in the first place.  For more information regarding the HHS position on home and hospice care, go here.   

Class Action Alleges Medicare Has Policy of Denying Home Health Appeals

A U.S. district court has recently ruled that there is evidence that Medicare has a policy of routinely upholding denials of home health services at the first two levels of review. Sherman v. Burwell (U.S. Dist. Ct., D. Conn., No. 3:15-CV-01468(JAM), Aug. 8, 2016).  The court certified a class and denied a motion to dismiss a claim against the Department of Health and Human Services.

Bradley Olsen-Ecker was a Medicare beneficiary who required home care after a hospitalization. He received care from a Medicare-certified home health agency, including skilled nursing visits and physical therapy. After a few months, Medicare informed him that it would no longer cover home care because unskilled caregivers could meet his needs. Mr. Olsen-Ecker appealed the decision. Medicare denied the appeals at three levels of review. Finally, Mr. Olsen-Ecker's physical therapist submitted a "demand bill" to Medicare, and Medicare reimbursed the physical therapist for its services. Mr. Olsen-Ecker passed away during the appeal process.

The current Medicare appeals process involves four separate levels of review.  First, Medicare beneficiaries who wish to appeal a decision receive a paper review redetermination by the original contractor who made the determination. A "paper review" is a review of the documents alone, without an in-person hearing. If that review fails, the beneficiary requests reconsideration by a separate entity that contracts with HHS (known as the Qualified Independent Contractor, or QIC). If a beneficiary does not obtain relief from the QIC‘s review, he may request a hearing before an Administrative Law Judge (ALJ). Finally, if the claim is denied by the ALJ, a beneficiary may receive a paper review by the Medicare Appeals Council. There is also an expedited process available, of which Olsen-Ecker took advantage of in his appeals process.

The current review process went into effect in 2010. Previously, a Medicare beneficiary who wanted to appeal an initial adverse determination first obtained a paper review by the original contractor. If that appeal was denied, then the beneficiary could either receive a hearing in front of an ALJ or a "carrier hearing" involving a complete review of the record before a hearing officer, depending on the type of Medicare benefits the beneficiary received. Either way, the second level of review under the old review system involved a hearing and not just another paper review. Then, if the beneficiary still wanted to appeal, he either received a paper review by the Medicare Appeals Council, or an ALJ hearing if he had not had one before, and then a paper review by the Medicare Appeals Council.  

Changes in the review  process have resulted in a drastic reduction in the number of appeals that result in a favorable coverage determination for beneficiaries at the first two levels of review, i.e., the redetermination by paper review by the original contractor, and the reconsideration by paper review by the QIC. These two levels of reconsideration have success rates for claimants as low as .61% each year, or as high as 2.2%. The total number of redetermination requests has also increased nearly ten-fold from 13,385 in 2008 to 112,844 in 2012. The change has also placed a great burden on the ALJs, increasing their workload by 184%. In the meantime, the reversal rate by ALJs -resulting in favorable coverage decisions- is about 70% across all of Medicare, and 62% on home health care and hospice decisions, according to HHS.  Simply, despite rhetoric of HHS to the contrary, it appears that HHS is agressively hostile to both home health care, and hospice care. 

Mr. Olsen-Ecker's estate filed a class action lawsuit against the Department of Health and Human Services (HHS) for violating Mr. Olsen-Ecker's constitutional  due process rights, alleging that the agency has a secret policy to deny home health services claims at the first two levels of review. According to the estate, HHS denies up to 99 percent of claims at the first two levels of review and that at the administrative hearing level of review, administrative law judges (ALJs) reverse the lower levels of review 62 percent of the time. HHS filed a motion to dismiss for failure to state a claim.

The U.S. District Court, District of Connecticut, denied the motion to dismiss. The court certified the class and ruled that there is plausible evidence that policies exist that deprive some Medicare beneficiaries of meaningful review.  According to the court, the high number of reversals at the ALJ level of review suggests that "whatever review occurred at the first two levels of review could have plausibly contained defects, because absent some aberration, the first two levels of review should have granted coverage to a far greater proportion of beneficiaries."  Moreover, the Court cited the "somewhat unnerving alleged facts...that his first two levels of review found that tasks like assessing the effectiveness of medication and performing body system assessments could be performed by [Mr.  Olsen-Ecker] or by unskilled care," suggesting to the Court that "it is not implausible to believe that there may have been some policy put in place that, when administered by the care providers and QICs, resulted in improper denials.  Sherman v. Burwell at p. 13.

Attorneys from the Center for Medicare Advocacy represented the estate. “We hope,” said Judith Stein, the Center’s Executive Director, “that this case will eventually result in Medicare beneficiaries’ receiving fair and accurate appeal decisions, without having to present their case at a hearing.”  

For information what Medicare's homebound or home health care benefits "should" be, go here.

For the Center’s news alerts on the decision, click here.

DOL Conflict of Interest Rule Impede Management of Retirement Funds

The $7.3 trillion IRA market is the largest and fastest-growing segment of the U.S. retirement market.  The Department of Labor’s (DOL) new conflict of interest rule will, however, impose greater scrutiny and complexity on the rollover market and potentially disrupt proper management of these assets.  These are the conclusions of global analytics firm Cerulli Associates in a new survey, “U.S. Evolution of the Retirement Investor 2016: Regulation and investor addressability.” The report explores the future of the IRA rollover market following implementation of the DOL’s fiduciary rule.

Jessica Sclafani, associate director at Cerulli, explained:

“There is general consensus in the retirement industry that more assets will remain in employer-sponsored DC [defined contribution] plans because of the rule.  While Cerulli generally agrees with this statement, there are additional considerations, such as the influence of existing advisor relationships, which is the greatest driver of IRA rollover assets, in addition to DC-plan-specific considerations, such as current DC plan design and lack of in-plan retirement income solutions, that may continue to support the migration of DC plan assets to the retail IRA market.”

Using Cerulli’s proprietary IRA rollover model, their research seeks to quantify the degree to which assets traditionally pegged as headed toward the IRA market may now be “at risk” and more likely to remain in employer-sponsored DC plans.  Cerulli’s IRA-focused research also examines how IRA providers that are also retirement plan providers will negotiate this new landscape in which it will be more challenging to direct DC plan participants to move assets from a low-cost account with institutional pricing to a higher-cost retail account.

Common wisdom has long held that most investors benefit from rolling over an employer-sponsored 401(k) to a self-directed IRA when permissible.  CPA Ed Slott, author of "The Retirement Savings Time Bomb ... and How to Defuse It,"  told Bankrate.com  that IRAs offer "more choice, more control" for consumers than company-sponsored 401(k) plans. "In most cases, a rollover is better," says Slott, author of "The Retirement Savings Time Bomb ... and How to Defuse It." But, he admits, there are some issues -- like holding company stock, early retirement, or threats of law suits, that in specific situations mitigate against roll-over.  Of course, for the consumer, the important take-away is that the consumer needs to get good advice.

Unfortunately, the new conflict of interest rules mean, if the study is correct, that consumers are less likely to get that advice, and therefore, are less likely to make the proper investment and management choices.

The reasons are myriad and complex.  One example identified in the study is the heavy reliance by consumers accustomed to dealing with institutional employer-sponsored defined contribution plans on call centers for advice and counsel.  According to industry reports,  the most frequently cited reasons for participants to contact their 401(k) plan call center are to change investments (47%).  Plan participants may fear making a mistake online or they may want reassurance throughout the process, so they turn to the 401(k) call center. The topic of investments, whether transactional or informational, can be a precarious one for call centers, especially with the recent regulations passed down from the Department of Labor (DOL). Just because call center representatives are registered does not necessarily mean they can provide investment advice to 401(k) plan participants. As a result, consumer's are left with bad advice, or refusal to give proper advise due to threatened or potential liability for suggesting better alternatives.

Another example is in naming beneficiaries.  Even competent investment advisors have difficulty advising plan participants properly, particularly when they are unaware of the specifics of an investor's estate plan.  Should a trust be a beneficiary of a qualified plan?  As most clients getting proper estate planning advice know, the answer to that question depends upon a variety of factors, including the objectives of the investor, the type of trust, and the availability of other options.  The new rules only make it more likely that an investor will be advised to "stay the course," potentially assuring the investor in improper management and investment decisions.

Obviously, the solution for the consumer is to build a team of professional financial and legal advisors working together, and sharing information regarding goals, philosophies, tools, and alternatives.  In that way, both the consumer and the participating professionals can be assured that their clients are receiving and implementing proper management and investment decisions.

For more information, go here.

Contesting Guardianship or Challenging Guardians Is Problematic

Nina A. Kohn, Associate Dean for Research,  David M. Levy,  Professor of Law at the Syracuse University College of Law, and Catheryn Koss, Founder and former Executive Director of the Senior Law Resource Center, have written an excellent and revealing article describing the challenges for seniors and the disabled in obtaining counsel in modern guardianship cases. The article, "LAWYERS FOR LEGAL GHOSTS: THE LEGALITY AND ETHICS OF REPRESENTING PERSONS SUBJECT TO GUARDIANSHIP, is published in the Washington Law Review.

The article begins by describing the landmark guardianship battle fought in 2012 by Jenny Hatch, a 28-year-old woman with Down syndrome. Ms. Hatch was placed in a group home by her parents, who were appointed as her guardians. Ms Hatch grew despondent about the restrictive placement, the loss of her independent lifestyle, and that she was no longer permitted to work at a local thrift store. She retained an attorney to challenge both the existence of the guardianship and the appointment of her parents as guardians.

She prevailed. In a landmark decision, a Virginia court removed her parents as guardians, appointed Ms. Hatch's close friends in their place, and held that the guardianship itself would terminate after a year. A year later, she was legally reincarnated, restored from being a ward of the state to full legal personhood. The Hatch case was reported on this blog.

The authors next describe why the Hatch case was so extraordinary:

Jenny’s story captured national attention in large part because it is so unusual. Few persons subject to guardianship are able to change the terms and conditions of their guardianships, let alone regain legal capacity after a court has determined that they lack capacity to make decisions for themselves. Jenny [Ms. Hatch] was able to do both.  

A key factor in this success was that Jenny had access to legal representation. Unfortunately, many people in Jenny’s position do not. A major factor contributing to this lack of access is that attorneys are unsure whether they may legally and ethically represent a person subject guardianship.  Attorney reluctance to undertake such representation is understandable.  [emphasis added]. A person subject to guardianship has, by definition, been judicially determined to lack legal capacity and his or her decisions have been delegated to a third party... Through this process, the person has not only been declared by a court to be incapable of directing his or her own affairs but has typically been stripped of the capacity to enter into a legally binding contract. Both may appear to be insurmountable barriers [to effective legal representation]. Attorneys generally can only represent clients who have the capacity to enter into a contract to hire the attorney and the capacity to direct the attorney during the course of the representation. Moreover, in some jurisdictions, probate courts have taken the position that they can prevent a lawyer from representing a person subject to guardianship who wishes to challenge the guardianship.

The authors agree that, especially under these circumstances, guardianship can be a devastating result with significant consequence.  The abstract to the article explains:

Stripped of legal personhood, the individual becomes a ward of the state and his or her decisions are delegated to a guardian. If the guardian abuses that power or the guardianship has been wrongly imposed — as research suggests is not infrequently the case [emphasis added] — the person subject to guardianship may rightly wish to mount a legal challenge. However, effectively doing so requires the assistance of an attorney, and persons subject to guardianship typically have not only been declared by a court to be incapable of directing their own affairs but have been stripped of the capacity to contract. As a result, those who wish to challenge the terms and conditions of their guardianship, or even merely to exercise unrelated retained rights, can be stymied because attorneys are unwilling to accept representation for fear that it is unlawful or unethical.

The aging of the population means the number of persons potentially subject to guardianship is likely increasing. Although precise figures are unknown, estimates suggest that about 1.5 million adults are subject to guardianships in the United States. Many of these are older persons who suffer from Alzheimer’s disease or other forms of dementia. The number of persons subject to guardianship may grow as the number of persons with such conditions increases.  The number of older individuals over age sixty-five in the United States diagnosed with Alzheimer’s disease is projected to reach more than seven million by the year 2025, a forty percent increase over 2014 figures.

"Perhaps more importantly, there is a growing recognition that many guardianships have been wrongly imposed or are overbroad."  This recognition, encouraged in part by the United Nation’s adoption of the Convention on the Rights of Persons with Disabilities (CRPD), has, according to the authors, led to increased interest from the disability rights community in restoring the rights of persons subject to guardianship by challenging judicial determinations of incapacity.

For more information regarding guardianship, see the following articles:

• Estate Plans Should Consider and Attempt to Resolve Guardianship;
• Illinois Permits Guardian Authority to Petition for Termination of a Ward's Marriage; 
• GAO reports on Guardianship Abuse;
• National Groups Acknowledge Need for Guardianship Reform;
• Report on Abuse by Guardians and the Guardianship Process Released;
• Another Reason for Guardianship Planning: Guardian Convicted of Homicide in Death of Ward 

Considerations in Crafting Health Care Proxies or Durable Powers of Attorney for Health Care

The most important document in your estate plan is the document appointing a health care proxy.  In Ohio and in Missouri this document is called a Durable Powers of Attorney for Health Care.  A health care proxy is a legal document that appoints another person to make health care decisions for you if and when you are unable. This person is usually called a proxy, agent, or attorney-in-fact.

The reason your health care proxy is the most important document in your estate plan, is that it protects you during your life at a time when you are most vulnerable- when you are ill, incapacitated, and/ or incompetent.  It helps to ensure that timely health care decisions can be made in emergent situations, and  it also helps to ensure that you always receive the health care you prefer. In health care decision-making, timeliness, quality, and preferences, are all important objectives best attained by a proper health care proxy.

Typically, you do not have to be terminally ill for a health care proxy to go into effect.  Nonetheless, a health care proxy can, if you so choose, enforce your end-of-life decisions.  Your living will, or advanced declarations, make your wishes known to your health care professionals.  In the event that they decline or refuse to act on your behalf, your health care proxy can protect your decisions.

If you do not appoint a health care proxy and cannot make health care decisions, state law determines who can make decisions on your behalf. Most states have laws that let close family members and others (surrogates) act on your behalf if you haven’t appointed a health care agent, but you may not want these people to make decisions for you.  Moreover, there may be delay resulting from identifying and verifying the relationship of these surrogates.  Finally, there may be limitations on what decisions these surrogates can make on your behalf.  

When choosing a health care agent, it’s important to appoint someone:

• Who you trust;
• Who you are confident will implement your decisions rather than substituting their decisions for your own;
• Who knows you, and therefore well understands your medical preferences;
• Who will be assertive in making decisions;
• Who will honor your wishes;
• Who will be able to resist pressure from family, friends, and/or health care professionals and institutions to ignore or alter your decisions;
• Who will be capable of communicating effectively with health care professionals;
• Who can be reached in the event of an emergency.

Because you should always appoint multiple successive agents, it is not necessary that the person you choose be the person that lives nearer your hospital, but you might resist appointing a person in active military service who is often unavailable for long periods of time.  Additionally, because familiarity with the health care system and medical terminology and procedures might make for more efficient communication and decision-making, you might consider more favorably those with medical background or experience.

Regardless, once you have appointed an agent, you must follow through with the appointment by communicating your choices with your agent.  At a minimum, that should mean providing the agent a copy of your health care proxy, and living will.  You should inform them of the identity of your primary care physician. In addition, you should discuss with your health care agent:

• Personal attitudes towards health, illness, dying, and death;
• Religious beliefs;
• Feelings about doctors and other caregivers;
• Feelings about institutional care and alternatives to institutional care;  
• Feelings about palliative care versus life-sustaining treatments like technologically supplied food and and hydration;
• Treatment preference if you are permanently unconscious or unconscious for a long time and not expected to recover.

You might consider a system like LegalVault® to effectively communicate, store, and make available your health care decisions and information to your agents and health care professionals.

A health care proxy generally only confers upon your agent the authority to make medical decisions for you. Decisions about things such as health insurance may be considered a financial, and not a medical decision,  depending on state law. It’s generally best to consult with a lawyer to appoint a general power of attorney for financial and non-medical decisions.

You do not need an attorney to write a health care proxy. You can use a standardized form and tailor it to your needs, but you may want to consult legal counsel to ensure that it meets all of your state’s legal requirements. Many attorneys, like myself, will either provide a statutory form, or will prepare a health care proxy at no or minimal expense.