U.S. Court of Appeals sets January for arguments over erroneously sent Medicare premium reimbursements after holding lower court's decision

Oct 8 2006

The U.S. Court of Appeals for the District of Columbia Circuit on Wednesday issued a temporary hold on an order by a lower court that CMS must inform 230,000 Medicare beneficiaries who received erroneous reimbursements of their Medicare prescription drug benefit premiums of their right to request a waiver of recovery of the funds, the Washington Post reports.

In addition, under the hold, CMS does not have to return erroneous reimbursements recovered from the affected Medicare beneficiaries immediately (Washington Post, 10/6). The affected Medicare beneficiaries received a total of $50 million in erroneous reimbursements in August as the result of a computer error. In response, CMS sent letters to the affected Medicare beneficiaries that instructed them to return the erroneous reimbursements, which averaged $215, to the federal government by Sept. 30. The Gray Panthers and the Action Alliance of Senior Citizens last month filed a lawsuit that seeks to block the required return of the erroneous reimbursements. According to the lawsuit, federal law allows for waiver of recovery of funds when beneficiaries are not at fault for overpayments. U.S. District Court Judge Henry Kennedy on Sept. 28 ordered CMS Administrator Mark McClellan to send letters immediately to the affected Medicare beneficiaries to inform them of their right to request a waiver under federal law. In addition, he said that erroneous reimbursements returned to the federal government "must be immediately returned to the beneficiaries so that they may decide whether to request waiver" (Kaiser Daily Health Policy, 9/29). CMS appealed the decision (Freking, AP/Houston Chronicle, 10/5).

Temporary Hold

The appeals court issued the temporary hold to allow a three-judge panel to review arguments in the lawsuit (Washington Post, 10/6). The court also scheduled a trial for January. CMS officials said that the agency will continue efforts to recover erroneous reimbursements from the affected Medicare beneficiaries. According to the AP/Chronicle, CMS to date has recovered erroneous reimbursements from about half of the affected Medicare beneficiaries. McClellan said, "CMS remains flexible in working with each beneficiary to resolve their premium payment issue," adding, "This includes providing the option of making premium payments over many months if that is what the beneficiary prefers" (AP/Houston Chronicle, 10/5).