Opinion
3:21-cv-01074-AR
01-10-2024
LIVING WELL PDX, PC, an Oregon Corporation, Plaintiff, v. UNITED STATES DEPARTMENT OF HUMAN SERVICES, and XAVIER BECERRA, In his Official Capacity as Secretary of Health and Human Services, Defendants.
FINDINGS AND RECOMMENDATION
JEFF ARMISTEAD UNITED STATES MAGISTRATE JUDGE
Plaintiff Living Well PDX, PC, a Medicare provider, seeks judicial review of the administrative law judge's (ALJ) partially favorable decision on its appeal of a determination by the Department of Health and Human Services (HHS) that Living Well is liable for the overpayment of non-covered services. In particular, Living Well challenges the ALJ's determination that the monochromatic infrared photo energy (MIRE) and transcutaneous electrical nerve stimulation (TENS) services that it provided to multiple Medicare beneficiaries and billed to Medicare were not covered as “routine costs” associated with a qualified clinical trial (QCT) and were not otherwise covered by Medicare as reasonable and necessary. Before the court are the parties' cross-motions for summary judgment. As explained below, defendants HHS and Secretary Becerra's motion should be GRANTED, Living Well's motion should be DENIED, and the Secretary's final decision should be AFFIRMED.
STATUTORY AND REGULATORY BACKGROUND
Medicare is a federally funded health insurance program that covers the elderly and disabled. 42 U.S.C. § 1395 et seq. Medicare is administered by HHS, which has delegated this responsibility to its agency, the Centers for Medicare and Medicaid Services (CMS). 42 U.S.C. § 1395hh(a)(1).
This case involves reimbursement claims under Medicare Part B. 42 U.S.C. § 1395m. Medicare Part B is voluntary supplemental medical insurance covering doctors' services, outpatient care, and durable medical equipment. 42 U.S.C. §§ 1395j, 1395k(a)(2), 1395m. Medicare Part B operates like private medical insurance in that Medicare beneficiaries receive medical care and treatment from Medicare providers, here Living Well, and Medicare providers in turn submit reimbursement claims to the government. 42 U.S.C. § 1395n; Global Rescue Jets,LLC v. Kaiser Found. Health Plan, Inc., 30 F.4th 905, 909 (9th Cir. 2022). Medicare, however, “pays only for services that are medically ‘reasonable and necessary.'” Odell v. U.S. Dep't of Health & Human Servs., 995 F.3d 718, 720 (9th Cir. 2021) (quoting 42 U.S.C. § 1395y(a)(1)(A)); Palomar Med. Ctr. v. Sebelius, 693 F.3d 1151, 1155 (9th Cir. 2012). The Secretary determines what items or services are “reasonable and necessary” and what information is required as a condition of payment. 42 U.S.C. §§ 1395ff(a), 1395g, 1395l ; 42 C.F.R. § 424.5; Heckler v. Ringer, 466 U.S. 602, 617 (1984); Cmty. Hosp. of Monterey Peninsula v. Thompson, 323 F.3d 782, 789-90 (9th Cir. 2003).
CMS contracts with Medicare Administrative Contractors (MACs), which are private entities, to review and pay claims submitted by providers for reimbursement on the government's behalf. See 42 U.S.C. §§ 1395u(a), 1395kk-1(a); 42 C.F.R. § 421.5(c); U.S ex rel. Hartpence v. Kinetic Concepts, Inc., 44 F.4th 838, 840 (9th Cir. 2022). Each MAC is responsible for a particular region of the country. 42 C.F.R. § 421.404(b)(1), (c)(1). MACs make initial determinations about coverage and amounts. 42 U.S.C. § 1395ff(a), § 1395y(a)(1)(A); 42 C.F.R. § 405.920. Generally, MACs reimburse the providers' claims immediately, and auditors subsequently review those payments to determine any overpayments or underpayments. Edgar A. Gamboa, M.D. Med. Corp. v. Becerra, Case No. 5:22-cv-02865-EJD, 2023 WL 6391490, at *1 (N.D. Cal. Sept. 29, 2023). If there is an overpayment, the MAC can make an adjustment or seek to recover the overpayment from the provider. Id.; 42 U.S.C. § 1395gg.
MACs may rely on several sources for guidance about coverage. Odell, 995 F.3d at 720. One such source is called a “national coverage determination” (NCD) that provides “whether or not a particular item or service is covered nationally” by Medicare. 42 U.S.C. § 1395ff(f)(1)(B). An NCD is binding on MACs and ALJs. Odell, 995 F.3d at 720; Erringer v. Thompson, 371 F.3d 625, 628 (9th Cir. 2004) (“The Secretary adopts NCDs to exclude certain items and services from coverage on a national level that are not ‘reasonable and necessary' under the agency's interpretation of the Medicare statute.”). Another source for coverage guidance is called a “local coverage determination” (LCD), which specifies “whether a particular item or service will be covered within its jurisdiction.” Odell, 995 F.3d at 720 (citing 42 U.S.C. § 1395ff(f)(2)(B)); Gamboa, 2023 WL 6391490, at *1 (noting that LCDs are issued by MACs to promote consistency in initial determinations and “whether or under what conditions that contractor will approve reimbursement for some set of items or services”) (quoting Agendia, Inc. v. Becerra, 4 F.4th 896, 897 (9th Cir. 2021), cert. denied, 211 L.Ed.2d 605 (Jan. 24, 2022)). Unlike NCDs, LCD's are not binding on ALJs and the Medicare Appeals Council; instead, LCD's must be given “substantial deference” and if not followed, an explanation must be provided. Odell, 995 F.3d at 721 (citing 42 C.F.R. § 405.1062(a), (b).) Absent governing regulations, NCDs, or LCDs, MACs determine coverage for specific services or items on a case-by-case basis. Id. (citing 42 U.S.C. § 1395y(a)(1)(A)).
“Before adopting an LCD, a contractor must solicit public comment and hold an open meeting.” Id. (citing Medicare Program Integrity Manual § 13.2.4 (rev. 863, Oct. 3, 2018)). Interested parties may request that MACs reconsider LCDs, and Medicare patients may challenge an LCD through an administrative and judicial process. Id. (citing 42 U.S.C. § 1395ff(f)(2), (5)).
A Medicare provider may challenge a MAC's coverage denial through four levels of administrative review. First, it may request that the MAC conduct a “redetermination.” 42 U.S.C. § 1395ff(a)(3); 42 C.F.R. § 405.940. Second, it may seek “reconsideration” of the MAC's denial by a “qualified independent contractor” (QIC). 42 U.S.C. § 1395ff(b)(1)(A) & (c)(2); 42 C.F.R. § 405.960. Third, if dissatisfied with the QIC's denial, the provider may request a hearing before an ALJ. 42 U.S.C. § 1395ff(b)(1)(A), (E) & (d)(1); 42 C.F.R. § 405.1002. Fourth, the provider may seek review of the ALJ's decision by the Medicare Appeals Council (the Council). 42 U.S.C. § 1395ff(d)(2); 42 C.F.R. § 405.1100. After exhausting those four levels, the provider may seek judicial review of the agency's final decision in district court, as provided in 42 U.S.C. § 405(g). 42 U.S.C. § 1395ff(b)(1)(A). In this case, the Council did not respond within the statutorily provided time limit and, therefore, the parties agree that the ALJ's decision is the Secretary's final decision.
FACTUAL BACKGROUND AND ALJ'S DECISION
Living Well provided medical treatment to 10 Medicare Beneficiaries (the Beneficiaries). The treatment included MIRE and TENS infrared therapy services, and peripheral nerve blocks between April 2014 and May 2015. (Second Am. Compl. Ex. 1 at 1, ECF No. 26-2.) Living Well billed Medicare for those services and received Medicare reimbursement. After an audit, the MAC demanded repayment upon determining that those services were not covered by Medicare and that an overpayment occurred. Based on the overpayment, CMS suspended Living Well's Medicare payments. (AR 167.) Living Well requested a redetermination; the MAC upheld its denial of coverage. Living Well requested review by the QIC, which affirmed the denial of coverage. The bases for the denial were that (1) the clinical trial was not a “qualifying clinical trial”; (2) MIRE therapy services were not reasonable and necessary under NCD 270.6; (3) the use of peripheral nerve blocks were investigational and not reasonable or necessary under LCD L34779; and (4) the TENS therapy services were provided in conjunction with the non-covered MIRE services and were billed as physical therapy (PT) services, but the PT requirements were not satisfied. (AR 922, 924.) Living Well then requested review by an ALJ.
ALJ David Krane conducted hearings on January 10, 2019, and May 2, 2019, reviewed the record, and heard testimony from Ron Davis, the Clinical Compliance Manager for the clinical trial, and George Brew, Living Well's attorney. The ALJ issued a decision partially favorable to Living Well on May 14, 2019. In the decision, the ALJ found that all 10 Beneficiaries were enrolled in a qualifying clinical trial (QCT), NCT01979367: Study Neurological Ischemia Lower Extremity Pain and Swelling. The ALJ found that the clinical trial is registered with the National Institutes of Health, and that the stated purpose of the study was “to evaluate the efficacy treatment of lower extremity pathologies derived from neurological ischemia disorders using the combination of [MIRE] and [TENS] therapies.” Further determined by the ALJ was that all 10 Beneficiaries were participating in the QTC for purposes of Medicare coverage, and that the peripheral nerve blocks the Beneficiaries received were “routine costs” associated with that QTC because the nerve blocks were administered to manage pain. (AR 922-23, 939.)
Living Well does not challenge the ALJ's favorable decision determining coverage exists for the nerve block injections, and that determination is not at issue.
The ALJ, however, determined that MIRE and TENS therapy services were not covered by Medicare, for three reasons. First, the services could not be covered as “routine costs” because they were investigational items being studied and, therefore, were specifically excepted from coverage under NCD 310.1. Second, MIRE therapy is not otherwise generally available to Medicare beneficiaries because there is a national non-coverage decision (NCD 270.6) that excludes MIRE therapy for peripheral neuropathy. Third, TENS therapy is not otherwise covered under LCD L34779 for treatment for peripheral neuropathy, the condition the Beneficiaries had.
Those noncovered services, the ALJ determined, were a remaining liability for Living Well. Although Living Well provided Advanced Beneficiary Notices (ABNs) to the Beneficiaries advising them that the MIRE and TENS services may not be covered, the ALJ concluded that the explanation offered by Living Well was inadequate and, thus, invalid. (AR 939-42.)
Living Well subsequently filed this appeal, challenging the denial of coverage for the MIRE and TENS services and whether the ALJ correctly found it liable for the overpayment.
LEGAL STANDARD
The court's judicial review of Medicare disputes is governed by the Administrative Procedure Act (APA) and the Social Security Act. Int'l Rehab. Scis. Inc. v. Sebelius, 688 F.3d 994, 1000 (9th Cir. 2012) (citing 5 U.S.C. § 706); Odell, 995 F.3d at 722 (“The judicial-review provision in the Medicare statute incorporates that of the Social Security Act.”). Under the APA, the court must affirm the Secretary's denial of coverage unless it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706; Int'l Rehab., 688 F.3d at 1000.
Under the Social Security Act, the court must affirm the Secretary's findings if “they are supported by ‘substantial evidence' and if the proper legal standard was applied.” KGV Easy Leasing Corp. v. Leavitt, 413 Fed.Appx. 966, 967 (9th Cir. 2011) (quoting Mayes v. Massanari, 276 F.3d 453, 458-59 (9th Cir. 2001)). “The Secretary's factual findings are conclusive if they are supported by ‘substantial evidence.'” Int'l Rehab., 688 F.3d at 1000; 42 U.S.C. § 405(g). “Substantial evidence means more than a mere scintilla but less than a preponderance; it is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Id.(quoting Sandgathe v. Chater, 108 F.3d 978, 980 (9th Cir. 1997)) (cleaned up).
DISCUSSION
Living Well challenges the ALJ's noncoverage determination for MIRE and TENS therapy services, making the following two arguments: (1) the ALJ's findings are erroneously premised on neuropathy diagnoses in the Beneficiaries' past medical histories, and that the ALJ relied on those diagnoses to incorrectly conclude that MIRE and TENS were not routine costs and not otherwise covered; and (2) the ALJ erred in relying on LCD L34779 to conclude that TENS is not covered because the services were provided for circulatory disorders, not peripheral neuropathy.
A. Routine Costs
Living Well argues that the ALJ based his noncoverage decision on the presence of neuropathy diagnoses in the Beneficiaries' past medical histories, and that the ALJ erroneously concluded that the clinical trial was treating neuropathy, instead of treating circulatory issues by increasing blood flow. In Living Well's view, the hearing testimony of Ron Davis conclusively establishes that the services provided during the clinical trial were “from day one to now, [for] circulatory issues causing ischemia.” (AR 5919.) Because the Beneficiaries had neuropathy diagnoses in their medical histories, Living Well maintains, the ALJ erroneously found that the treatment they received was for neuropathy, instead of circulatory issues. (Pl.'s Mot. Summ. J. at 6-7, ECF No. 36.) Living Well's arguments miss the mark because they fail to distinguish the ALJ's separate finding that MIRE and TENS are not routine costs because they are the investigational item being studied and excluded under NCD 310.1.
The ALJ determined that MIRE and TENS therapy services provided to the 10 Beneficiaries were not covered by Medicare because they were not “routine costs” associated with a QCT under NCD 310.1. Medicare typically covers the “routine costs” of qualifying clinical trials as defined in NCD 310.1:
Routine costs of a clinical trial include all items and services that are otherwise generally available to Medicare beneficiaries (i.e., there exists a benefit category, it is not statutorily excluded, and there is not a national non-coverage decision) that are provided in either the experimental or the control arms of a clinical trial except:
• The investigational item or service, itself unless otherwise covered outside of the clinical trial;
• Items and services provided solely to satisfy data collection and analysis needs and that are not used in the direct clinical management of the patient (e.g., monthly CT scans for a condition usually requiring only a single scan); and
• Items and services customarily provided by the research sponsors free-of-charge for any enrollee in the trial.
Routine costs in clinical trials include:
• Items or services that are typically provided absent a clinical trial (e.g., conventional care);
• Items or services required solely for the provision of the investigational item or service (e.g., administration of a noncovered chemotherapeutic agent), the clinically appropriate monitoring of the effects of the item or service, or the prevention of complications; and
• Items or services needed for reasonable and necessary care arising from the provision of an investigational item or service - in particular, for the diagnosis or treatment of complications.(AR 934-35.)
The ALJ determined that the MIRE and TENS therapy services were not routine costs because “it is the service itself that was being studied in the clinical trial.” The ALJ reasoned that, because MIRE and TENS are the services being studied in the clinical trial, they are specifically excepted from coverage as routine costs under NCD 310.1. See NCD 310.1 (identifying “the investigational item or service, itself unless otherwise covered outside of the clinical trial” as excepted from routine costs). Examining the clinical trial study description, the ALJ concluded that its purpose was “to evaluate the efficacy treatment of lower extremity pathologies derived from neurological ischemia disorders using the combination of [MIRE] and [TENS] therapies.” Consequently, because MIRE and TENS are the investigational items being studied, those items and services are expected to be “provided by the clinical study, not paid for by Medicare as a ‘routine cost' associated with a qualifying clinical study.” (AR 939.)
The ALJ's finding that MIRE and TENS are the investigational items is fully supported by evidence in the record. For example, the ALJ's characterization of the study's purpose using a combination of MIRE and TENS as “eliminating pain, reducing swelling, and accelerating recovery periods” is accurate. (AR 939.) The study identifies the American Association of Sensory Electrodiagnostic Medicine as the sponsor of the study, the Condition being studied as “Neuropathic Pain, Tingling or Numbness derived from neurological Ischmeia,” that the Intervention is MIRE and TENS in combination, and that its “Official Title” is “MIRE and TENS Therapy Treatment Study.” (AR 199, 203.) Based on that evidence, the ALJ reasonably could conclude that the MIRE and TENS services provided to the Beneficiaries are the “investigational items themselves being studied” and thus appropriately denied coverage because they are excluded from routine costs under NCD 310.1. Int'l Rehab., 688 F.3d at 1000 (“Substantial evidence means more than a mere scintilla but less than a preponderance; it is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” (cleaned up)).
B. Otherwise Covered
The ALJ also determined that the MIRE treatments provided were not otherwise available to Medicare beneficiaries under NCDs 310.1 and 270.6. Under NCD 310.1, “routine costs” includes all items and services that are generally available to Medicare beneficiaries, unless there is a statutory exclusion, an excluded benefit category, or there is a national noncoverage decision that applies. NCD 310.1. NCD 270.6 provides that there is no Medicare coverage for MIRE therapy services for peripheral neuropathy. The ALJ concluded that “MIRE cannot be covered as a routine cost of a clinical trial because there is a national non-coverage determination excluding [MIRE] from Medicare coverage for beneficiaries with peripheral neuropathy.” (AR 940.)
Living Well's challenge to the ALJ's application of NCD 270.6 is two-fold. First, Living Well contends that the ALJ erred because the QCT's purpose was to treat a lack of circulation (neurological ischemia), not peripheral neuropathy. Second, it argues that the ALJ erroneously found that the Beneficiaries were diagnosed with and were being treated for peripheral neuropathy. The Secretary responds that the decision must be upheld because the ALJ correctly applied NCD 270.6 and the decision is amply supported by substantial evidence in the record.
The court begins with NCD 270.6, which provides:
The use of infrared and/or near-infrared light and/or heat, including monochromatic infrared energy, is non-covered for the treatment, including the symptoms such as pain arising [from] these conditions, of diabetic and/or nondiabetic peripheral sensory neuropathy, wounds and/or ulcers of the skin and/or subcutaneous tissues.(AR 935.)
Purpose of the QCT. Living Well argues that the ALJ misunderstood the purpose of the clinical trial, and that the plain language of the clinical trial protocol supports its position that the MIRE and TENS services were provided “for the purpose of increasing blood flow.” (Pl.'s Mot. Summ. J. at 6-7; Pl.'s Resp. at 2, ECF No. 38.) Living Well also points to Davis's testimony that the study concentrated on neurological ischemia by restoring blood flow to particular nerves in the legs and feet. (Id. at 3-4; AR 5910-14.)
Those arguments, as the Secretary correctly asserts, were considered and rejected by the ALJ. In finding that Davis's testimony was undermined by the record, the ALJ noted that, although Davis testified that the clinical trial was to treat a “neurological condition (not a neuropathic one) by treating individual nerves identified in a small pain fiber test,” he also testified that participants in the clinical study were not asked whether they had neuropathy before being enrolled in the trial. The ALJ concluded that Davis's assertions were “disproven by the record” upon observing that each of Beneficiaries enrolled in the study was asked: “Have you been diagnosed with Neuropathy?” Also cited by the ALJ were the provider's own records advocating for coverage of the treatment because it had been shown to be effective for treating neuropathy. The ALJ found that the “the balance of the evidence in the record supports a conclusion that all of the services provided were to treat neuropathy” despite the provider not explicitly diagnosing neuropathy for the Beneficiaries receiving the treatment. (AR 940.)
Each of the ALJ's findings are supported by substantial evidence in the record. For instance, at the hearing, the ALJ inquired of Davis whether there was “underlying neuropathy involved” with the Beneficiaries, to which Davis responded: “Oh, no, no....there's not even a question that we asked before we put them inside the study.” (AR 5914-15.) Contrary to Davis's testimony, as stated by the ALJ, the Beneficiaries were each asked if they suffered from neuropathy. (See AR 1069, 1073, 1076, 1079 (Beneficiary D.N.); AR 4947, 4954, 4972, 4981 (Beneficiary D.S.); AR 3929, 3934 (Beneficiary S.G.); AR 5029, 5036 (Beneficiary E.T.); AR 3071-72 (Beneficiary D.D.); AR 5091, 5108, 5111 (Beneficiary P.W.); AR 4908, 4912, 4918, 4926 (Beneficiary R.R.); AR 3656, 3683, 3687, 3880-83 (Beneficiary R.F.); AR 5474, 5483, 5484, (Beneficiary R.W.); AR 4033, 4036-37, 4117, 4296 (Beneficiary R.J.).)
And substantial evidence in the record supports the ALJ's finding that the providers wrote coverage-advocacy letters to the MAC concerning the Beneficiaries. In those letters, as the ALJ correctly noted, the providers described that the Beneficiary was enrolled in the QCT, and that MIRE and TENS treatment was for “neuropathic pain.” (See, e.g., AR 3041-42 (letter for D.D.); AR 3633-34 (letter for R.F.); AR 4605-06 (letter for R.R.); AR 4995-97 (letter for D.S.); AR 5063-64 (letter for E.T.); AR 5127-28 (letter for P.W.).)
As the ALJ further found, the QCT itself describes that the MIRE and TENS therapy services are “performed for purpose of eliminating pain, reducing swelling, and accelerating recovery periods.” (AR 203.) Contrary to Living Well's assertion, there is little mention of improving circulation in the treatment study itself. (AR 199-207.) In the patient set-up and initial paperwork portion of the study, it makes passing reference to circulation. (AR 205 (“Monochromatic infrared light treatments, to improve circulatory issues, reduce swelling and pain, with the use of Anodyne professional units.”).) The ALJ could reasonably conclude that this limited information about circulation did not outweigh the remainder of the record; that is, Davis's disproven testimony, the Beneficiaries' medical records showing treatment for neuropathy, and the coverage-advocacy letters written by the providers describing that the treatment was for treating neuropathic pain. Based on the evidence cited by the ALJ, the court concludes that the ALJ's findings that the MIRE treatments were provided to treat neuropathy are amply supported and are a reasonable interpretation of the record. Therefore, the ALJ did not err in applying NCD 270.6 to find the MIRE therapy services were not otherwise covered by Medicare.
Peripheral Neuropathy and Treatment Code. Living Well also argues that, because the Beneficiaries' medical records reflect an “unspecified disorder of the circulatory system with a code of I99.9,” the ALJ erred by concluding that the Beneficiaries were being treated for peripheral neuropathy. (Pl.'s Mot. Summ. J. at 8; Pl.'s Resp. at 5 (citing AR 3659, 3682, 4000).) Given the view that the Beneficiaries' medical records reflect an I99.9 diagnostic code, Living Well contends that the ALJ erroneously relied on its own judgment to ascribe peripheral neuropathy diagnoses. And, Living Well contends that under the Medicare Claims Processing Manual, I99.9 is not listed as a diagnosis that is excluded from coverage under NCD 270.6. Living Well remonstrates that based on the ALJ's own, erroneous diagnosis, the ALJ applied NCD 270.6 to find the MIRE therapy was not otherwise covered.
In rejecting Living Well's argument, the ALJ found that Living Well “is mistaken in its argument that a service is ‘otherwise generally available to Medicare beneficiaries' if the code for it is payable under any other circumstance.” The ALJ reasoned that Living Well's position erroneously “removes the condition being treated from consideration and relies only on a procedure code.” (AR 940.) As the Secretary aptly argues, a provider's use of a particular code does not dictate Medicare coverage. See Int'l Rehab., 688 F.3d at 1004 (“[T]he fact that an item receives a billing code or fee schedule does not mean it is covered by Medicare, as the billing code and fee schedule manuals caution. Rather, the purpose of those codes and schedules is to promote uniform reporting and statistical data collection. They are used not only by Medicare, but also by private insurers and state Medicaid programs.”). In light of the ample evidence supporting the ALJ's determination that the MIRE and TENS therapy services were provided to treat neuropathy discussed above, the ALJ did not err in determining that the code assigned did not dictate whether the services were covered by Medicare.
In Living Well's Response, it also points to a diagnosis code of 353.1. (Pl.'s Resp. at 5.) The same rationale applies to code 353.1 as code I99.9; the ALJ did not err.
Living Well also challenges the ALJ determination that the TENS therapy is not “otherwise covered” by Medicare under LCD L34779. (AR 941.) LCD L34779 provides in relevant part:
The use of nerve blocks with or without the use of electrostimulation, and the use of electrostimulation alone for the treatment of multiple neuropathies or peripheral neuropathies cause by underlying systemic diseases is not considered medically reasonable and necessary. Medical management using systemic medications is clinically indicated for the treatment of these conditions.
At present, the literature and scientific evidence supporting the use of peripheral neve blocks with or without the use of electrostimulation/electromagnetic stimulation, and the use of electrostimulation/electromagnetic stimulation alone for neuropathies or peripheral neuropathies caused by underlying systemic diseases, is insufficient to warrant coverage. These procedures are considered investigational and are not eligible for coverage for the treatment of neuropathies or peripheral neuropathies caused by underlying systemic diseases.(AR 935.) The ALJ also discussed an updated version of LCD L34779 issued on September 1, 2014, which stated that:
The use of electrostimulation alone for the treatment of multiple neuropathies or peripheral neuropathies caused by underlying systemic diseases is not medically reasonable and necessary. These procedures are considered
investigational. Medical management using systemic medications is clinically indicated for the treatment of these conditions.(AR 936.)
Living Well argues that the ALJ erred in applying LCD L34779 to determine that the TENS therapy services were not otherwise covered in two ways: (1) the Beneficiaries were being treated for neurological ischemia, not peripheral neuropathy, and that LCD L34779 does not apply; and (2) the LCD was issued in 2014, and does not apply to the QCT that began in 2012. The court disagrees with both of Living Well's contentions.
Concerning the first, Living Well reiterates that the ALJ erred by determining that the Beneficiaries were treated for peripheral neuropathy. (Pl.'s Mot. Summ. J. at 9.) As discussed above with respect to MIRE, the ALJ's finding that the balance of the evidence shows that the Beneficiaries received TENS therapy services for the treatment of peripheral neuropathy is supported by substantial evidence and is a reasonable interpretation of the record. And, as the Secretary argues, the fact that Living Well used diagnosis codes I99.9 or 353.1 does not mean that the Beneficiaries were being treated for circulatory disorders. Because substantial evidence supports the ALJ's finding that the treatment they received was for peripheral neuropathy, the ALJ reasonably concluded that LCD L34779 applied and the ALJ did not err.
Turning to the second contention, Living Well submits that LCD L34779 was first passed in 2014 and cannot apply retroactively to the QCT that began in 2012, relying on a Local Medical Review Policy (LMRP) § 69.4. (Pl.'s Mot. Summ. J. at 9.) Living Well contends that LMRP § 69.4 provides that all “Clinical Trial Services that meet the requirements of the NCD (310.1) are considered reasonable and necessary.” (Pl.'s Resp. at 4-5.) The court is unconvinced. Initially, it is not clear that LMRP § 69.4 is included in the record and applicable here. Living Well does not cite to where the policy can be found in the administrative record. Next, even if LMRP § 69.4 were applicable, as discussed above, Living Well has not shown that the services satisfied all the requirements of NCD 310.1. As noted, the ALJ did not err in concluding that MIRE and TENS therapies were the investigational items and were excepted from coverage under NCD 310.1. Finally, Living Well has not shown that LCD L34779 does not apply; it states that it applies “to services performed on or after 08/08/2014.” (AR 87.) TENS therapy services provided to the Beneficiaries occurred in 2014 and 2015. Living Well does not identify any TENS therapy services provided to any Beneficiary before August 8, 2014, and the court declines to scour the record on Living Well's behalf. Thus, the ALJ's determination that is LCD L34779 precludes coverage for the TENS therapy services for the Beneficiaries' peripheral neuropathy is supported by substantial evidence, is a reasonable interpretation of the record, and will not be disturbed.
In summary, the ALJ's determination that coverage does not exist for the MIRE and TENS therapy services is supported by substantial evidence and free from legal error.
C. Waiver of Liability
Even if coverage is denied because the services were not “reasonable and necessary” Medicare may pay for those services if the provider “did not know, and could not reasonably have been expected to know, that payment would not be made for such items or services.” 42 U.S.C. § 1395pp; Int'l Rehab., 688 F.3d at 998; see also 42 C.F.R. § 411.400(a)(2) (providing that Medicare will pay for “services not reasonable and necessary” if “[n]either the beneficiary nor the provider . . . knew, or could reasonably have been expected to know, that the services were excluded from coverage”). Additionally, a provider may shift the risk of noncoverage to a beneficiary by notifying the beneficiary in writing that Medicare will likely deny coverage. Int'l Rehab., 688 F.3d at 998 (citing 42 C.F.R. § 411.404). Such written notices, called advance beneficiary notices (ABNs), allow beneficiaries to make informed decisions about services for which they may have to pay out-of-pocket. Id. For a provider to shift liability to a beneficiary with an ABN, it must be “sufficiently specific in explaining why Medicare will likely deny the claim.” Id.
In the decision, the ALJ determined that Living Well's liability could not be limited or waived under § 1395pp. The ALJ found that Living Well provided ABNs to eight of the 10 Beneficiaries that Medicare may not cover the MIRE and TENS therapy services. The ALJ reasoned that the ABNs were “substantially modified” by Living Well and created confusion about Medicare coverage. The ALJ stated that the ABNs did not adequately explain to the Beneficiaries why Medicare may not cover the MIRE and TENS therapy services, that the ABNs were invalid, and stated that the Beneficiaries were not liable for those services. The ALJ further determined that Living Well had “actual or constructive knowledge” of the applicable coverage criteria, that the ABNs “tend[ed] to show that the provider was aware Medicare coverage did not exist for the services it was providing,” it was not without fault, and therefore was liable for the overpayments. (AR 941-42.)
Living Well challenges the ALJ's determination that it is not eligible for a waiver of liability. (Pl.'s Mot. Summ. J. at 10.) Living Well contends that it and other providers have had MIRE and TENS therapy services covered as costs associated with the QCT “numerous times” and therefore had reason to believe that those services were covered. In Living Well's view, the numerous decisions from QICs finding that all services related to the QCT were covered demonstrates that it could not have known coverage would be denied, and the ALJ erred. Living Well further argues that it provided the ABNs to Beneficiaries at the Secretary's behest, and that those notices should not now be used against it to assess liability for the overpayments.
The Secretary advances two arguments in response: (1) Living Well is procedurally foreclosed from asserting error on waiver of liability because that argument was not raised in the Second Amended Complaint; and (2) the ALJ's decision finding that the waiver of liability under § 1395pp does not apply is supported by substantial evidence, free from legal error, and must be affirmed. The court begins with the Secretary's procedural argument.
As argued by the Secretary, Living Well did not identify the waiver of liability argument in its Second Amended Complaint. (Second Am. Compl., ECF No. 26.) Nevertheless, the Secretary points to no binding authority preventing the court from considering an argument on judicial review that was determined by the ALJ, raised by the claimant in its opening brief, yet not specifically addressed in the complaint. Moreover, the Secretary does not contend that it has been prejudiced by Living Well's failure to assert the § 1395pp argument earlier. Therefore, in this closed-record review of the proceedings below, and in the absence of controlling authority identified by the parties, the court will address Living Well's § 1395pp argument.
The court is unconvinced by Living Well's § 1395pp argument, for two primary reasons. First, Living Well has not established that the other ALJ or QIC decisions are applicable here. Living Well identifies one other ALJ decision in the record. In an April 13, 2016 decision, ALJ Marilyn Mann Faulkner determined that Beneficiary I.O.'s numerous TENS treatments by Robert Odell were covered as part of the routine costs of the same QCT here - Neurological Ischemia - Lower Extremity Pain and Swelling NCT01979367. However, ALJ Faulkner also determined that I.O. “was invited to participate in the Provider's study because she had a vestibular, auditory, balance and/or circulatory impairment.” (AR 47, 52-53.) Unlike the Beneficiaries in this case, it appears that I.O. was not being treated for peripheral neuropathy. Consequently, ALJ Faulkner's 2016 decision concerning the use of TENS therapy for a condition other than peripheral neuropathy does not render the ALJ's determination not to waive liability here arbitrary or capricious.
Living Well attempts to identify other agency final decisions in footnote seven of its summary judgment motion. There, Living Well states that Past Final Agency Decisions upholding the clinical trial and related services may be found at in the record at pages 41-48, along with an ALJ decision bearing the number 3-3836627417 dated August 2022. (Pl.'s Mot. Summ. J. at 10 n.7.) Pages 46-52 identify ALJ Faulkner's decision discussed above. However, the pages cited by Living Well do not contain other ALJ or QIC decisions. Moreover, Living Well's response to defendants' summary judgment motion does not identify where those other decisions are located within the Administrative Record. It is not the court's duty to comb the record for materials on Living Well's behalf.
Second, Living Well has not established that the ALJ's determination that it had constructive knowledge of the applicable coverage criteria is arbitrary and capricious. Living Well cites no authority showing that an ALJ may not rely on ABNs to establish constructive knowledge that certain services may not be covered. Living Well's out-of-district cases are unhelpful. For example, in Caring Hearts Personal Home Servs., Inc. v. Burwell, the Tenth Circuit reversed CMS's denial of relief under § 1395pp because CMS improperly applied a prospective regulation adopted in 2010 retroactively to skilled nursing services provided in 2008. 824 F.3d 968, 975 (10th Cir. 2016). In Caring Hearts, the court reasoned that the provider could not have known about a regulation that did not yet exist and that the agency's decision denying a waiver of liability therefore was arbitrary and capricious. Id. at 971, 977. And, in Cypress Home Care, Inc. v. Azar, the court affirmed coverage denials for skilled nursing, and denied a waiver of liability for the provider because the changed regulation discussed in Caring Hearts did not apply. 326 F.Supp.3d 307, 323 (E.D. Tex. 2018). Neither Caring Hearts nor Cypress Home Care shed light on Living Well's contention that the ALJ erred by relying on the ABNs. Based on the court's review, the ALJ's interpretation of the ABNs is backed by substantial evidence and is a reasonable interpretation of the record. Accordingly, Living Well has not demonstrated that the ALJ's refusal to waive liability under § 1395pp was arbitrary or capricious; the ALJ's decision should be affirmed. See Maximum Comfort, Inc. v. Sec'y Health & Human Servs., 512 F.3d 1081, 1088 (9th Cir. 2007) (providing that decision that provider was not excused from liability under § 1395pp must be affirmed unless arbitrary, capricious, an abuse of discretion, or an error of law).
CONCLUSION
For the above reasons, Living Well's Motion for Summary Judgment (ECF No. 36) should be DENIED, Defendants' Cross Motion for Summary Judgment (ECF No. 37) should be GRANTED, and the ALJ's decision should be AFFIRMED.
SCHEDULING ORDER
The Findings and Recommendation will be referred to a district judge. Objections, if any, are due within 14 days. If no objections are filed, the Findings and Recommendation will go under advisement on that date. If objections are filed, a response is due within 14 days. When the response is due or filed, whichever date is earlier, the Findings and Recommendation will go under advisement.