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St. Alexius Medical Center v. North Dakota Department of Human Services

Supreme Court of North Dakota

February 1, 2018

St. Alexius Medical Center, d/b/a Great Plains Rehabilitation, Appellant
v.
North Dakota Department of Human Services, Appellee

         Appeal from the District Court of Burleigh County, South Central Judicial District, the Honorable James S. Hill, Judge.

          Jason T. Lundy (argued), Chicago, IL and Sean O. Smith (appeared), Bismarck, ND, for appellant.

          Elizabeth A. Fischer (argued), and James E. Nicolai (appeared), Office of the Attorney General, Bismarck, ND, for appellee.

          OPINION

          JENSEN, JUSTICE.

         [¶ 1] St. Alexius Medical Center, doing business as Great Plains Rehabilitation ("Great Plains"), appeals from a district court judgment affirming a decision of the Department of Human Services ("the Department") determining that the Department was entitled to recoup overpayments made to Great Plains. Great Plains argues that the Department's decision should be reversed because the Department did not issue the decision within the statutory time limit, the Department did not provide a fair process for disputing the Department's position, and the Department's findings of fact are not supported by the evidence. We affirm the judgment.

         I

         [¶ 2] This case is one of three factually similar cases arising from administrative appeals initiated by providers of durable medical equipment and supplies (DME) to Medicaid recipients. See Sanford HealthCare Accessories, LLC v. N.D. Dep't of Human Servs., 2018 ND 35; Altru Specialty Servs., Inc. v. N.D. Dep't of Human Servs., 2017 ND 270, 903 N.W.2d 721. In all three cases, the Department issued administrative decisions determining that it was entitled to recoup overpayments made to the providers. In the Sanford and Altru cases, the district court determined the Department's decisions were "not in accordance with the law" under N.D.C.C. § 28-32-46(1) because the Department failed to issue the decisions within the seventy-five day deadline set forth in N.D.C.C. § 50-24.1-24(5). Great Plains did not challenge the timeliness of the Department's decision in the district court, and the district court affirmed the Department's decision after reviewing the Department's findings.

         [¶ 3] The Patient Protection and Affordable Care Act, 42 U.S.C. § 18001 et seq. (2010), and related federal regulations require states to establish a Medicaid Recovery Audit Contractor Program ("RAC") to audit past payments to ensure the state's Medicaid billing procedures and policies were followed by providers who requested payment of Medicaid claims. The Department contracted with an audit contractor to conduct the audit and review provider submitted Medicaid claims.

         [¶ 4] The documentation requirements and procedures for billing Medicaid claims are included in the Manual for Durable Medical Equipment, Orthotics, Prosthetics & Supplies ("DME Manual") published by the Department and available on the internet. See Manual for Durable Medical Equipment, Orthotics, Prosthetics & Supplies (March 2013), www.nd.gov/dhs/services/medicalserv/medicaid/docs/dme/dme-manual.pdf. The parties agree the relevant part of the DME Manual provides: "The diagnosis, medical necessity, and the projected length of need for a covered item must be included on the prescription, prior auth, or Certificate of Medical Necessity (CMN)." Great Plains asserted that the three items listed in the manual (diagnosis, medical necessity, and length of need) can be provided through a combination of the prescription, prior authorization, or certificate of medical necessity. The RAC auditor interpreted the language in the manual to require all three items to be found within a single record, i.e., either the prescription, prior authorization, or certificate of medical necessity.

         [¶ 5] The RAC audit determined that Great Plains had received overpayment from the Department in at least forty claims. For each of those claims, the RAC audit noted multiple deficiencies in the documentation Great Plains had provided to support Medicaid billings for equipment provided to Medicaid recipients. Great Plains sought administrative review challenging the findings of the RAC audit.

         [¶ 6] Great Plains filed its request for review of the RAC audit with the Department on August 6, 2015. Twenty days later, the Department sent Great Plains a letter outlining the documentation that Great Plains could submit to satisfy Medicaid's billing requirements for establishing the diagnosis, medical necessity, and projected length of need for DME. In the August 2015 letter to Great Plains, the Department noted its agreement with Great Plains that it would be acceptable for the diagnosis, medical necessity, and length of need to be found in a combination of the prescription, prior authorization, and certificate of medical necessity documents. The Department directed Great Plains to mark an "A" on one of the three acceptable documents showing the diagnosis, a "B" on one of the three documents showing the medical necessity, and a "C" on one of the three documents showing the projected length of need.

         [¶ 7] In response to the Department's August 2015 letter, Great Plains resubmitted the claims, marking the documents to show which documents included the diagnosis, medical necessity, and projected length of need. In some instances, Great Plains altered original prescription documents by adding the phrase "one time dispense" next to a designation of "C."

         [¶ 8] On March 29, 2016, the Department issued an administrative decision finding Great Plains had not complied with Medicaid billing requirements with respect to all forty claims, an overpayment had been made to Great Plains in the amount of $96, 140.35, and the Department was entitled to a recoupment of the overpayment. The decision noted that the requirement to document the diagnosis, medical necessity and length of need must be fulfilled by including the information within a combination of the prescription, prior authorization or certificate of medical necessity and could not be satisfied if the information was somewhere else within the medical record. The administrative decision also specifically noted Great Plains could not satisfy the documentation requirements by modifying an original prescription to include the length of need.

         [¶ 9] On April 29, 2016, Great Plains filed a Notice of Appeal and Specifications of Errors for Administrative Review, timely appealing the administrative decision to the district court. Great Plains advanced eight specifications of error, but did not challenge the timeliness of the Department's decision. Great Plains also failed to challenge ...


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