Sixth Circuit Sides with TMA-Backed Physicians on TennCare Payments

March 12, 2020

Time has run out for the government to appeal the grant of summary judgement in favor of a class of TMA member physicians in a case appealing the recoupment of $2.3 million. The decision was announced by the Sixth Circuit Court of Appeals on November 25, 2019.

During calendar years 2013-2014, payment rule provisions of the Affordable Care Act allowed certain physicians to receive reimbursement at 100% Medicare rate for TennCare patients who received primary care services.  This “rate bump” was a significant increase from the normal TennCare reimbursement.

After an audit conducted by the Bureau after the rate bump period, TennCare identified several physicians whom the Bureau interpreted did not meet the “60% rule,” which required that 60% of the physicians’ TennCare claims had to be for primary care services during 2013-2014 in order to have been reimbursed during that period at 100% Medicare. As a result, about $2.3 million was demanded in recoupment from the physicians. Many of these physicians were in TennCare MCO PCP networks!

Challenging the recoupment, the class of physicians then brought suit in federal court, seeking both a declaration that the 60% requirement was contrary to the terms of the Medicaid provision, and an injunction barring the requirement’s enforcement against them. The district court granted summary judgment to the physicians, declared the Final Medicaid Payment Rule invalid, and enjoined the government from enforcing that rule against them. The US government appealed to the Sixth Circuit Court of Appeals.

The issue on appeal was whether, in the Final Medicaid Payment Rule, the agency correctly interpreted the phrase “primary specialty designation” as used in § 1396a(a), to mandate not only that the physician have the requisite designation of primary specialty, but also that the physician either be board-certified in that specialty or satisfy the 60-percent-of-billings requirement.

TennCare did not correctly interpret the rule. The Sixth Circuit held that the term “primary specialty designation” as used in § 1396a(a)(13)(C) (the relevant Medicaid provision of the Affordable Care Act) means the same thing that it means in § 1395l(x)(2)(A)(i)(I) (the relevant Medicare provision). There is no 60%-of-billings requirement in § 1396a(a). And the phrase “a physician with a primary specialty designation” means in § 1396a(a) the same thing that the agency said it means in § 1395l(x): namely, a physician who has himself designated, as his primary specialty, one of the specialties recited in those provisions. The Medicaid Final Payment Rule is “flatly inconsistent with that meaning.”

The Tennessee Medical Association and the American Medical Association helped fund the plaintiff physicians on the front end so they could afford legal counsel to fight the recoupment attempt.

“TMA and AMA stepped up to help physician members challenge a clearly invalid interpretation of a rule targeted to help them. The litigation funding assistance was the culmination of TMA’s efforts to advocate for these doctors with the Bureau and at the Tennessee General Assembly level. Many of these practices would not have had the funds to move forward considering the risk involved; some practices had over $100,000 in recoupments at stake. This hurt rural physicians disproportionately so we are pleased TMA was able to help,” said TMA General Counsel Yarnell Beatty.

Since the case was appealed to the U.S. Supreme Court, the matter is concluded and the recoupments are no longer a threat to Tennessee primary care physicians.