CMS Ordered to go Back to the Drawing Board Before Applying Outlier Reconciliation Criteria

    October 2016

    A federal district court recently reversed CMS’s decision to recoup more than $2 million through application of CMS’s outlier reconciliation criteria. Clarian Health West, LLC v. Burwell (14-cv-0339, Aug. 26, 2016). CMS had established its reconciliation criteria in 2010, in its Medicare Claims Processing Manual. However, the court determined that those criteria comprise substantive regulations that CMS was not permitted to issue or apply without first going through notice and comment procedures. This ruling not only reverses the recoupment at issue in the Clarian Health West case, but also provides grounds to challenge other reconciliation actions the agency has taken to date. Providers should review whether they have been (or are currently) subject to any reconciliation initiatives by their contractor, and take steps to protect their appeal rights.

    For background regarding outlier reconciliation requirements, the Clarian Health West decision and some related next steps, please refer to this publication.