By SERJ MOORADIAN
Healthcare providers balance their time and resources between providing the best possible care to patients and keeping up with their ever-changing regulatory landscape. Providers are often at the mercy of the federal and state agencies that administer healthcare programs, which have significant discretion in interpreting statutes, promulgating rules and guidance that implement those statutes, and their enforcement. Due to the sheer number of applicable requirements, any provider that regularly bills a government healthcare program is likely to have an enforcement action brought against it by a government agency at some point, no matter how strong the provider’s compliance program is.
When an administrative agency takes an enforcement action, successfully challenging that action can be difficult. The same agency usually controls the administrative appeals process, which the provider must exhaust before it can challenge the agency’s decision in court. Then, the court still gives substantial deference to the agency’s decision, on the grounds that government healthcare programs are complex and that the legislature has delegated to the agency to use its wisdom and resources to administer the program.
Because of the deference administrative agencies receive, it is vital for providers challenging an agency’s action to understand how to navigate the process and to carefully plan out their appeals. Providers who casually submit appeals without carefully considering the appeals’ content, or who miss deadlines, harm their own chances of success. Carefully planning an appeal at the outset can be expensive, but poor navigation of the appeals process can be even more costly in the long run.
Three key takeaways for providers wanting to challenge an agency action are:
Key #1 – Carefully assemble the administrative record
If a provider does not methodically construct the administrative record (i.e., the evidence presented in the appeal) with coherent arguments and as much corroborating evidence as possible, it will be at a disadvantage throughout the appeal. The administrative record constitutes the universe in which an appeal exists. The further along a provider gets into an administrative proceeding, the fewer opportunities there will be to raise new arguments and supplement the record with new evidence. Therefore, at the beginning of the process, the administrative record should be filled with as much documentation as possible that shows that the agency’s decision is not supported. This does not mean a provider should randomly overload the record with anything it can find. Rather, the evidence should be systematically presented it in a way that logically supports the arguments made. If the appeal ends up in court, the court will almost always make a decision based solely on the administrative record before it.
Key #2 – Objectively evaluate the reasonableness of the agency’s action
Providers must objectively evaluate the reasonableness of the agency’s decision before and throughout an administrative appeal, or have a neutral third party to do so on their behalf. While there are a number of legal standards that dictate when an agency decision should be overturned, a court is ultimately likely to uphold an agency decision if there is any reasonable explanation for the agency’s action based on the facts in the administrative record. The more reasonable the agency’s action, the higher the provider’s burden in challenging the action, and the expense of doing so, will be. Providers that objectively evaluate the reasonableness of the agency’s action can better determine whether the expense of appealing a decision makes financial sense.
Key #3 – Perform a cost-benefit analysis and know when to settle
Early in the appeals process, providers should weigh the cost (in time and money) of the appeal against both the prospective reward of winning and the cost of losing. Even if a provider has great legal arguments and the evidence in the administrative record makes it objectively clear that the agency is being unreasonable, if the cost of fighting the appeal to its final conclusion is more expensive than the amount that could be spent to settle the case early, then fighting the appeal to its natural conclusion may not be worth that expense. This cost-benefit analysis differs on a provider-by-provider and case-by-case basis based on each provider’s risk tolerance. Some providers enjoy the certainty of having a case concluded as quickly as possible; others prefer clearing their names, no matter the cost.
These takeaways are not intended to be an exhaustive list of things to consider in preparing an administrative appeal. However, they are intended to emphasize the importance of properly planning an administrative appeal, being objective about the chance of success and being realistic about the risks and rewards of conducting the appeal. Once an appeal has been submitted and the administrative record set, there is usually very little an attorney or anyone else can do to raise new arguments or present new evidence that were not raised or presented earlier in the appeals process. Therefore, providers inexperienced with administrative appeals should always engage the assistance of someone knowledgeable in navigating the process.