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Bergen Regional Medical Center, L.P. v. New Jersey State Dep't of Human Services


March 17, 2008


On appeal from the Department of Human Services, Division of Medical Assistance and Health Services, OAL Docket No. HMA 11048-03 and OAL Docket No. HMA 09856-02.

Per curiam.


Submitted December 5, 2007

Before Judges Parker and Lyons.

Petitioner, Bergen Regional Medical Center (Hospital), appeals from a final decision by the Director of the Division of Medical Assistance and Health Services (DMAHS) denying petitioner's claims for Medicaid-reimbursable services it rendered to five patients. The Administrative Law Judge (ALJ) who initially heard the consolidated petitions found in favor of the Hospital and ordered that the agency process the claims. On April 26, 2006, however, the Director reversed the ALJ's decision, concluding that the Hospital was remiss in its billing practices.

On appeal, the Hospital argues that (1) it pursued the claims in a diligent and timely manner; (2) the agency misapplied the regulation addressing Medicare/Medicaid crossover claims; and (3) the Hospital's ongoing communications with the agency satisfied the regulatory requirement that claimants "follow up" in order to correct errors in submitted claims.

The highly technical nature of the claims involved in the administration of Medicaid benefits places this matter squarely within the agency's expertise. After carefully considering the record in light of petitioner's arguments, however, we are persuaded that the Director erred with respect to one of the five petitions at issue, the Hospital's claim on behalf of Margaret Blahut. The record indicates that the Blahut claim was presented within the time prescribed by the regulation and was denied primarily because the Medicaid fiscal agent prematurely purged the claim from its system. For that reason, we reverse the Director's decision on the Blahut claim. We affirm the Director's denial of the remaining four claims, however, substantially for the reasons stated in the Director's decision rendered on April 26, 2006.

Medicaid is jointly funded by the State and Federal governments and is available to individuals who meet the financial eligibility criteria. 42 U.S.C.A. § 1396; N.J.S.A. 30:4D-2. Medicare, on the other hand, is funded solely by the federal government and applies only to the elderly and disabled.

42 U.S.C.A. § 1395c. Medicare has two parts: Part A, which covers care from institutional providers; and Part B, which covers certain inpatient, physician and laboratory services. 42 U.S.C.A. § 1395k.

Elderly or disabled individuals with poor financial resources may be covered by both Medicare and Medicaid. Claims made to both Medicare and Medicaid are commonly referred to as "crossover claims." When a crossover claim is submitted on behalf of a beneficiary, Medicare has the obligation of first payment because Medicaid is designed to be the payer of last resort. 42 U.S.C.A. 1396a(a); N.J.S.A. 30:4D-2; N.J.A.C. 10:49-7.3(b).

Claims for Medicaid benefits made by a hospital must be submitted to Unisys Corporation*fn1 (Unisys) within one year from the date of the patient's discharge. N.J.A.C. 10:49-7.2(b).*fn2 "It is the responsibility of the provider to ensure that each Medicaid claim submitted by that provider is received by the New Jersey Medicaid program's Fiscal Agent within the time periods indicated in this section." N.J.A.C. 10:49-7.2(a)(2). "The New Jersey Medicaid program shall not reimburse for a claim received outside the prescribed time periods. This policy also applies to inquiries concerning a claim or claim related information received outside the prescribed time periods." N.J.A.C. 10:49-7.2(a)(2)(i).

The procedure for submitting crossover claims is set forth in N.J.A.C. 10:49-7.2(d):

The time requirements for submitting a combination Medicare/Medicaid or Medicare/NJ KidCare claim are as follows . . . .

1. A combination Medicare/Medicaid claim is defined as a request for payment from the New Jersey Medicaid program for a medical service provided to any Medicare/Medicaid beneficiary.

2. A combination Medicare/Medicaid claim shall be received by the Medicare Intermediary/Carrier within the applicable Medicaid timely submission period [see N.J.A.C. 10:49-7.2(b) and (c)] to be considered for further payment by the New Jersey Medicaid program.

i. The provider shall continue to have one year from the date of service for a claim to be received by the Medicaid Fiscal Agent. A claim received by the Medicaid Fiscal Agent after Medicare adjudication and within one year from the date of service shall be considered timely submitted.

ii. For combination

Medicare/Medicaid claims received by the Medicare Intermediary/Carrier within the applicable Medicaid timely submission period and where Medicare adjudication occurs beyond the one year of the date of service, the provider shall submit a claim to be received by the Medicaid Fiscal Agent within 90 days of the date of the Medicare adjudication.

iii. For Medicare/Medicaid claims where the Medicare adjudication occurs within one year from the date of service, but less than 90 days remain within the timely filing period, the provider shall submit the claim to be received by Medicaid within the one year timely filing period or 90 days, whichever is later.

iv. A combination Medicare/Medicaid claim received outside the applicable Medicaid timely submission period shall not be reimbursed by the New Jersey Medicaid program.

3. In most cases, when a beneficiary is eligible for both Medicare and Medicaid, or Medicare and NJ KidCare, a Medicare/Medicaid approved claim will crossover from the Medicare Carrier/Intermediary to the [Medicaid] Program's Fiscal agent. The provider is requested to allow 45 days from Medicare adjudication for the Medicaid or NJ KidCare program to receive and process crossover claims. Failure to allow the 45 days for the transition from Medicare to Medicaid or NJ KidCare may result in payment delays due to duplicate claim errors. There are instances, however, where claims will not cross over from Medicare. In those instances, or when a Medicare/Medicaid or Medicare/NJ KidCare crossover is not reflected on the provider's Medicaid Remittance Advice within 45 days of the Medicare Explanation of Benefits (EOB), the provider shall follow the billing instructions in the Fiscal Agent Billing Supplement following the second chapter of the Provider Services Manual.

N.J.A.C. 10:49-7.2(e) states that "[i]f additional information is required in order to process a claim, the provider shall supply the information as soon as possible, but not more than 90 days after the end of the applicable timely submission period." N.J.A.C. 10:49-7.2(f) limits the time for inquiries about adjudicated claims to ninety days following the date of adjudication; N.J.A.C. 10:49-7.2(g) limits the time for inquiry about non-adjudicated claims to ninety days after the end of the timely submission period. A request for a fair hearing on issues arising out of the payment process must be made in writing within twenty days of the notice of the agency action. N.J.A.C. 10:49-10.3(a)(2).

The Hospital submitted claims to Unisys for services rendered to five patients: Margaret Blahut; John Miller; Susan Nacib; Michael Sands; and Nicholas Disney. Each claim followed a unique path through the administrative network and therefore must be considered on its own merits.

The Sands and Disney claims differ from the others because the services rendered to those patients spanned fiscal calendar years and the need to bifurcate these claims complicated their agency reviews. The Blahut claim is the most complex, largely because Medicare repeatedly revised its payment adjudications over a period of almost three years. In contrast, the Miller and Nacib claims are relatively straight-forward and are at issue primarily because the Hospital asserts that it adequately followed up on these claims through telephone conversations with Unisys administrators.

The ALJ observed that the claims were filed with Medicare within one year of the patient discharge dates. She characterized the issue presented as whether the initial Medicaid filings, re-submissions, corrections, requests for assistance, inadvertent mistakes, and delays should be deemed contrary to the applicable DMAHS regulations. After reviewing the procedural history of the claims, she concluded that each was timely under the limits imposed by N.J.A.C. 10:49-7.2(b)(1)(i).

The Director reversed the ALJ's Initial Decision as contrary to DMAHS regulations. She concluded that it was clear the Hospital failed to adhere to the timely filing requirements and that DMAHS was entitled to prevail as a matter of law. The Director noted that the time limits governing a provider's submission of claims must be strictly applied so that the State will not lose matching federal funds. She further noted that the burden is on the provider to ensure that all billing is complete and that any errors or problems have been rectified within ninety days after the end of the timely submission period.

The Director rejected the ALJ's determination that N.J.A.C. 10:49-7.2(e) allows a provider ninety days after the end of the one-year submission period required by N.J.A.C. 10:49-7.2(b)(1)(i) to rectify the claims. She observed that "once a claim was adjudicated and denied by DMAHS, [the Hospital] had 90 days in which to follow-up on the denial and submit additional information or a corrected claim." She thus concluded that the five claims were not perfected in a timely manner.

With respect to the Blahut claim, the Director found that the Hospital did not respond to the billing problem identified on May 3, 2000 until October 31, 2000, which was well beyond the ninety-day time limit. Further, she found that the claim was defective because it was submitted to Unisys while there were still outstanding Medicare Part B charges on the claim form. She noted that if the Hospital believed that Blahut's Medicare benefits had been exhausted, it was required to submit an itemized bill for Medicare non-covered services pursuant to N.J.A.C. 10:52-4.6(c).*fn3

As to the Miller claim, the Director found that the Hospital erred in submitting the claim to Unisys before billing Medicare Part B for ancillary charges. She determined that the ALJ's conclusion that there were no Part B charges was directly contradicted by the clear listing of services in the body of the claim form. Moreover, even if the Hospital believed there were no Part B charges, it was required to submit an itemized bill as per N.J.A.C. 10:52-4.6(c). The Director rejected the Hospital's argument that it addressed the problems with the Miller claim through telephone calls to Medicaid staff, finding that telephone contact did not constitute the sufficient follow-up contemplated by the regulations.

The Director concluded that the Nacib claim was untimely for the same reasons as the Miller claim. The Hospital failed to bill Medicare Part B for ancillary charges prior to submitting the claim to Unisys. She also rejected the contention that the Hospital had adequately followed up on the billing problems, finding that it "submitted exact duplicates of the internal notes it presented in the [Miller] claim regarding telephone contact with Medicaid staff."

Concerning the Sands claim, the Director noted that the first Medicaid submission was rejected by Unisys because the hospital had failed to bifurcate the charges. She observed that the Hospital did not submit a corrected claim form until eight months later, well beyond the ninety-day time limit imposed by the regulation.

Finally, the Director found that the Disney claim was properly denied because the Hospital failed to correct a billing error within the regulatory time limit. Although the Hospital had properly bifurcated the claims, it erred in submitting them to Unisys before billing Medicare Part A and in subsequently billing Medicare Part A beyond the one-year time limit. She further noted that if the Hospital believed that Disney had exhausted his Medicare benefits it was required to submit an itemized bill for Medicare non-covered services pursuant to N.J.A.C. 10:52-4.6(c).

The Director emphasized that federal regulations require a Medicaid provider to file a Medicaid claim within twelve months from the date of service and to supply any necessary additional information within ninety days of the end of the applicable timely submission period. Observing that DMAHS had no authority to waive these requirements, the Director concluded that "[i]t is clear that, in each of the above instances, [the Hospital] was remiss in its billing practices, and its claims were properly denied."

The Hospital argues that the Director's decision was arbitrary, capricious, unreasonable, and violative of express legislative policies. It maintains that it filed the claims, followed up on errors and requested fairness hearings within the time limits established by the regulations.

Although the Hospital asks us to consider this matter de novo, "[c]courts have only a limited role to play in reviewing the actions of other branches of government." Matter of Musick, 143 N.J. 206, 216 (1996). When reviewing administrative actions, we can intervene only when the action is clearly inconsistent with the agency's statutory mission or other State policy. Ibid.

Although sometimes phrased in terms of a search for arbitrary or unreasonable action, the judicial role is generally restricted to three inquiries: (1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law; (2) whether the record contains substantial evidence to support the findings on which the agency bases its action; and (3) whether, in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors. [Ibid. (citing Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963)).]

"[I]f in reviewing an agency decision an appellate court finds sufficient credible evidence in the record to support the agency's conclusions, that court must uphold those findings even if the court believes that it would have reached a different result." In the Matter of Taylor, 158 N.J. 644, 657 (1999); accord Dougherty v. Dep't of Human Servs., 91 N.J. 1, 12 (1982). Nevertheless, our review of an agency decision is not simply a pro forma exercise; it calls for careful and principled consideration of the agency record. Costantino v. N.J. Merit Sys. Bd., 313 N.J. Super. 212, 225 (App. Div.), certif. denied, 157 N.J. 544 (1998); Chou v. Rutgers, The State Univ., 283 N.J. Super. 524, 539 (App. Div. 1995), certif. denied, 145 N.J. 374 (1996).

The Hospital argues that it complied with the N.J.A.C. 10:49-7.2 requirements for the submission of the claims and appealed the denial of the claims in a timely manner. It contends that the Director erred by imposing the N.J.A.C. 10:49-7.2(f) requirement that a provider inquire about a Unisys-adjudicated claim within ninety days of the adjudication without considering the fact that the Unisys action occurred while Medicare adjudication was still pending.

With respect to the Blahut claim, the Hospital submitted the claim to Medicare Part A within one year of the patient's discharge date pursuant to N.J.A.C. 10:49-7.2(b). Medicare Part A adjudicated the claim on April 19, 2000, and initiated the Medicaid process by transmitting a crossover claim to Unisys. Unisys rejected the crossover claim on May 3, 2000 due to a technical coding error and the Hospital did not submit a corrected claim until October 31, 2000, well beyond the time limit imposed by N.J.A.C. 10:49-7.2(f). However, Medicare Part A's initial adjudication was still under review during this time period.

Medicare Part A voided its initial adjudication on November 10, 2000 and continued processing the claim until June 28, 2002, when it rendered a final adjudication. While the matter was proceeding before Medicare Part A, the Hospital filed a claim for Medicare Part B services. The Medicare Part B claim remained under review until October 11, 2002, when a final adjudication was issued.

During the time that the matter was pending before Medicare, the claim was in process at Medicaid/Unisys. The last substantive adjudication of the claim by Unisys occurred on October 9, 2002, when it was denied as an "invalid type of bill." Thus, even though more than two years had passed since the initial Medicaid claim, Unisys did not reject the matter as untimely and was still apparently considering the claim on its merits. Upon the Hospital's inquiry following the Medicare Part B adjudication, however, Unisys denied the claim, asserting that the matter was not on file. This final action occurred on November 27, 2002.

In a letter dated January 29, 2003, the Hospital inquired about the Blahut claim. This inquiry occurred within ninety days of the November 27, 2002 adjudication and was thus within the time limit of N.J.A.C. 10:49-7.2(f). On February 10, 2003, Michael Huber of the Unisys Correspondence Unit acknowledged that there was a Medicaid number on file for Blahut, but wrote that "the State does not authorize us to process claims that are older than two years from date of service even if proof of timely filing exists." Huber noted that there might be extenuating circumstances in the case and recommended that the Hospital request a fairness hearing.

The Director did not address any of the "extenuating circumstances" in her decision. Rather, she determined that the Blahut claim became untimely when the Hospital failed to follow up within ninety days of the Unisys denial of May 3, 2000. She further found the claim untimely because the Hospital did not bill Medicare Part B before filing the Medicaid claim. The Director failed to recognize that it was Medicare Part A, not the Hospital, that initiated the Medicaid claim and that Unisys continued to consider the claim as timely at least until October 9, 2002. Moreover, the Director did not consider that the matter remained in process before Medicare until October 11, 2002. The Director's conclusion that the N.J.A.C. 10:49-7.2(f) time limit began to run immediately following the May 3, 2000 adjudication is not supported by the substantial credible evidence in the record.

The regulations are silent as to the procedure to follow when Medicare adjudication is prolonged, fragmented and punctuated with errors and revisions. N.J.A.C. 10:49-7.2(d)(2)(ii), however, makes clear that Medicare adjudication tolls the one-year filing limit for Medicaid claims. Thus, the hospital should have been allowed ninety days following the October 11, 2002 Medicare adjudication to file its Medicaid claim.

More importantly, applying the N.J.A.C. 10:49-7.2(f) time limit in the manner proposed by DMAHS directly contravenes the Legislature's intent that Medicaid be the payer of last resort. N.J.S.A. 30:4D-2. If a provider is forced to file and perfect a Medicaid claim when the possibility exists that Medicare will still pay a portion of that claim, then Medicaid will inevitably pay for claims that might otherwise be funded by Medicare. Providers will have no incentive to aggressively follow up on their Medicare claims.

Because the Director's decision with regard to the Blahut claim is contrary to DMAHS regulations and legislative policies, it should be reversed. The agency should be directed to process the claim as timely filed.

With respect to the remaining four claims, we affirm the Director's April 26, 2006 decision substantially for the reasons stated therein. R. 2:11-3(e)(1)(D).

Affirmed in part; reversed in part.

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