On May 22, 2014, the American Hospital Association (AHA) and three member hospitals filed a lawsuit against Secretary Kathleen Sebelius, in her capacity as the Secretary of the U.S. Department of Health and Human Services (HHS), in the U.S. District Court for the District of Columbia to compel HHS to meet the statutory deadlines for the administrative review of denials of claims for Medicare reimbursements. 

In late 2013, the HHS Office of Medicare Hearings and Appeals (OMHA) issued a memorandum explaining that it would be suspending the assignment of most new requests for Administrative Law Judge (ALJ) hearings for the next two years due to a massive backlog of appeals and a shortage of ALJs. 

In their complaint, the AHA, Baxter Regional Hospital, Inc. (Mountain Home, Arkansas), Covenant Health (Knoxville, Tennessee), and Rutland Hospital, Inc. (Rutland, Vermont) contend that the lengthy delays in the Medicare appeals process are causing severe financial harm to Medicare providers. Baxter Regional Hospital claims that it has approximately $4.6 million tied up in the Medicare appeals process, with more than $1.7 million pending at the ALJ level. Similarly, Covenant’s Hospitals have more than $7.6 million in system-wide claims pending in the Medicare appeals process, approximately $6.6 million of which is pending at the ALJ level, and Rutland Hospital currently has approximately $588,000 tied up in the Medicare appeals process, of which approximately $554,000 is pending at the ALJ level. 


On May 22, 2014, the Office of Management and Budget (OMB) announced that it would begin reviewing a proposed rule revising the conditions of participation (CoPs) that home health agencies must meet to participate in the Medicare program. The home health CoPs have not been revised since 1989. The proposed rule was published in 1997, but was never finalized. 


The Obama Administration recently announced that it allow HHS to continue its efforts to mitigate cyberrisk. Last year, President Obama issued Executive Order (EO) 13636, “Improving Critical Infrastructure Cybersecurity,” which required HHS and other Executive Branch agencies to assess whether and how existing cybersecurity regulation could be streamlined and better aligned with the Cybersecurity Framework. 

As explained by Michael Daniel, Special Assistant to the President and Cybersecurity Coordinator, “the Cybersecurity Framework articulates a risk management approach based on best practices and globally recognized standards. It is a voluntary tool that organizations can use to strengthen cyber risk management.” The Framework was launched in February 2014. 

The White House decided to not to force HHS (or the other agencies) to adopt new cyber-specific regulations after reviewing its May 12, 2014 report


On May 12, 2014, the HHS Office of Inspector General (OIG) published a proposed rule implementing the new civil monetary penalty (CMP) authorities provided under the Affordable Care Act. Specifically, the proposed rule would add the following new conduct to the list of actions subject to CMPs and exclusion:

  • failure to grant OIG timely access to records, upon reasonable request; 
  • ordering or prescribing while excluded when the excluded person knows or should know that the item or service may be paid for by a Federal health care program; 
  • making false statements, omissions, or misrepresentations in an enrollment or similar bid or application to participate in a Federal health care program; 
  • failure to report and return an overpayment that is known to the person; and 
  • making or using a false record or statement that is material to a false or fraudulent claim.

Comments on this proposed rule are due July 11, 2014. 

The May 12th proposed rule was published just three days after the OIG’s May 9, 2014 proposed rule that would expand the OIG’s exclusion authority to persons or entities who: 

  • have been convicted of an offense in connection with obstruction of an audit; 
  • fail to supply payment information (the Affordable Care Act expanded this provision to apply to individuals who ‘‘order, refer for furnishing, or certify the need for’’ items or services for which payment may be made under Medicare or any State health care program); and 
  • make, or cause to be made, any false statement, omission, or misrepresentation of a material fact in applications to participate as a provider of services or supplier under a Federal health care program.

The rule also proposes a modification to the reinstatement rules for individuals excluded as a result of losing their licenses to allow them to rejoin the programs earlier when appropriate. Comments on this proposed rule are due July 9, 2014. 


Edwards Wildman’s Healthcare Practice Group will continue to monitor healthcare news from Capitol Hill, CMS, HHS, and other federal and state agencies, and will bring you timely updates as new developments occur.