The Pennsylvania Commonwealth Court has upheld an order of the Department of Human Services (“DHS”) disallowing a nursing facility’s practice of billing Medicaid for Medicare cost-sharing amounts of dual eligible (Medicare and Medicaid) residents. See Mulberry Square Elder Care v. D.H.S., No. 371 C.D. 2017 (Decided: July 26, 2018). The Court found that by representing Medicare Part B copays as costs incurred, the nursing facility held residents legally liable for their payment without collecting the amount, and therefore, engaged in prohibited balance billing.
At issue was a billing practice instituted by a nursing facility by which it attempted to recoup unpaid Medicare Part B copays of its residents by deducting the amount of the copays from the patient liability amounts, as it is permitted to do in certain circumstances for “other medical expenses” (i.e., the costs of medical goods or services incurred during that month). Then, the nursing facility billed Medicaid for the Part B copays as “other medical expenses” in order to offset the amount subtracted from the patient liability. In so doing, the facility sought and was paid more than the maximum Medicaid fee for the service. Under federal and state law, Medicaid is prohibited from paying Medicare cost-sharing amounts, such as copays, when the Medicare payment for the service exceeds the Medicaid payment.
As part of a billing audit, DHS disallowed the facility’s billing practice based on incorrect patient liability amounts, and for billing Medicare Part B copays as “other medical expenses.” On appeal, the facility argued DHS had no basis for taking such action as it did not promulgate a regulation prohibiting the billing practice. DHS countered by noting that the billing practice directly violated federal and state law. It also asserted that by holding residents liable for the copays by deducting the amount from their patient liability and billing them as “other medical expenses,” the facility engaged in prohibited balance billing. Balance billing involves holding patients liable for charges that remain unpaid by Medicare or Medicaid. The Court ruled in favor of DHS’ position and found that the facility engaged in impermissible balance billing, even though it only billed, and did not collect, amounts from residents.
The Commonwealth Court’s decision in Mulberry serves to remind nursing facilities and other providers to be compliant in holding enrollees of the Medicare program responsible for any cost-sharing amounts, such as copays, and to be mindful of the general prohibition on balance billing.
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