Atlanticare Medical Center v. Division of Medical Assistance

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SJC-12828
ATLANTICARE MEDICAL CENTER & others1 vs. DIVISION OF MEDICAL
ASSISTANCE.
Suffolk. February 10, 2020. - July 21, 2020.
Present: Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, &
Kafker, JJ.
Medicaid. Division of Medical Assistance. Public Welfare,
Medical assistance benefits. Regulation. Hospital,
Medicaid reimbursement. Medicare. Judgment, Relief from
judgment. Practice, Civil, Relief from judgment.
Civil action commenced in the Superior Court Department on
April 6, 2000.
Following review by this court, 439 Mass. 1 (2003), a
motion for relief from judgment, filed on September 28, 2018,
was heard by Debra A. Squires-Lee, J.
The Supreme Judicial Court granted an application for
direct appellate review.
Douglas S. Martland, Assistant Attorney General, for the
defendant.
Charlene E. Kent for the plaintiffs.
1 Salem Hospital; Lawrence General Hospital; Hale Hospital;
Beverly Hospital; and Deaconess Waltham Hospital.
2
KAFKER, J. In the instant case we are asked to revisit a
decision issued by this court in 2003 involving State Medicaid
reimbursements, in light of subsequent developments to the
relevant Federal law. At issue is the State's Medicaid program,
MassHealth, which provides insurance for indigent residents of
the Commonwealth.2 In Atlanticare Med. Ctr. v. Commissioner of
the Div. of Med. Assistance, 439 Mass. 1, 3, 5 (2003)
(Atlanticare I), this court affirmed a judgment declaring that
part of a State Medicaid regulation, 130 Code Mass. Regs.
§ 450.316(E) (1998),3 was inconsistent with the Federal Medicaid
scheme. The regulatory provision required health care providers
to return payments to MassHealth where a third-party insurer was
later identified as liable for the payment that MassHealth had
already paid out. Id. at 2. We concluded that the Federal
Medicaid scheme tasked the State Medicaid agency, not individual
providers, with seeking reimbursement from liable third-party
2 At the time the original complaint was filed, the Division
of Medical Assistance was designated as the "single State
agency" responsible for administering the State Medicaid plan.
See 42 U.S.C. § 1396a(a)(5) (State Medicaid plans must designate
single State agency to administer plan). In 2003, however, the
Executive Office of Health and Human Services was deemed to be
the single State agency responsible for administration of the
program. See G. L. c. 118E, § 1, inserted by St. 2003, c. 26,
§ 308. For simplicity, we will refer to the defendant as
"MassHealth" throughout this opinion.
3 The provision at issue in this regulation has since been
moved from subsection (E) to subsection (F) of 130 Code Mass.
Regs. § 450.316 (2019).
3
insurers, including Medicare. Id. at 6-7. We thus held that
the State regulation impermissibly shifted the burden for
seeking reimbursement onto health care providers, in violation
of the Federal statutory scheme. Id. at 14. In so holding, we
rejected the argument that MassHealth would be unable to
directly seek reimbursement where the liable third party at
issue was Medicare. Id. at 11.
Pursuant to our ruling in Atlanticare I, MassHealth began
seeking reimbursements directly from Medicare, rather than from
providers, where Medicare was identified as a liable third-party
insurer. The Center for Medicare & Medicaid Services (CMS), a
division of the Department of Health and Human Services (HHS)
that oversees the administration of Medicaid and Medicare at the
Federal level, refused to issue reimbursements from Medicare to
MassHealth, however. See Daley v. Secretary of the Executive
Office of Health & Humans Servs., 477 Mass. 188, 190 (2017);
Massachusetts v. Sebelius, 638 F.3d 24, 25 (1st Cir. 2011)
(Sebelius). CMS maintained that Medicare funds could only be
paid out to providers, not MassHealth, and that MassHealth could
only obtain Medicare reimbursements by going through providers.
Sebelius, supra. MassHealth brought suit against CMS in Federal
court, challenging this position. Id. at 29. In a 2011 ruling,
the United States Court of Appeals for the First Circuit agreed
with CMS's position, and held that the Federal Medicare scheme
4
prohibited State Medicaid agencies, including MassHealth, from
receiving funds from Medicare. See id. at 36. At around the
same time, a Federal Medicare regulation was amended to
acknowledge the practice of State Medicaid agencies obtaining
Medicare reimbursements through providers, rather than seeking
such reimbursements directly from Medicare. See 42 C.F.R.
§ 424.44(b)(3) (2019).
In light of the First Circuit's holding and the amendment
to 42 C.F.R. § 424.44(b), MassHealth sought to modify the
declaratory judgment and restore MassHealth's ability to obtain
reimbursements from providers, rather than liable third parties.
For the reasons discussed infra, we conclude that MassHealth has
demonstrated a sufficient change in circumstances to warrant
modification of the judgment. We further conclude, however,
that only a narrow modification of the judgment is necessary to
allow MassHealth to seek reimbursement where the liable third
party is Medicare. Accordingly, we order that this case be
remanded to the Superior Court for modification of the judgment
in accordance with this opinion.
1. Background. a. Overview of Medicaid and Medicare.
Medicare is a Federal program that provides health care benefits
to the elderly and disabled. See Briggs v. Commonwealth, 428
Mass. 241, 243 (1999); 42 U.S.C. §§ 1395 et seq. Medicare is
supported entirely by Federal funds and is administered by the
5
Federal government. See Briggs, supra. Medicaid, by contrast,
is a health care program designed to assist the needy and
indigent. See id.; 42 U.S.C. § 1396 et seq. Unlike Medicare,
Medicaid follows a model of "cooperative federalism" between the
State and Federal governments (citation omitted). See Harris v.
McRae, 448 U.S. 297, 308 (1980) (McRae). State participation in
Medicaid is voluntary, but those States that choose to
participate must develop a State plan in compliance with Federal
requirements. See Massachusetts Eye & Ear Infirmary v.
Commissioner of the Div. of Med. Assistance, 428 Mass. 805, 812
(1999). State Medicaid plans must comply with requirements set
forth in the Federal statutory scheme, as well as Federal
regulations promulgated by HHS. See id. In exchange, "the
Federal Government agrees to pay a specified percentage of 'the
total amount expended . . . as medical assistance under the
State plan . . . ." McRae, supra, quoting 42 U.S.C.
§ 1396b(a)(1). Although States must comply with Federal
requirements, Medicaid is designed to provide some flexibility
to the States to formulate a plan tailored to each State's
individual needs. See Danvers Pathology Assocs., Inc. v.
Atkins, 757 F.2d 427, 428 (1st Cir. 1985).
Eligibility for Medicaid and Medicare are not mutually
exclusive. An individual who is both elderly and indigent may
be "dual eligible[]" for both programs. See Briggs, 429 Mass.
6
at 244. See also Connecticut Dep't of Social Servs. v. Leavitt,
428 F.3d 138, 141 (2d Cir. 2005) (Leavitt) ("Because elderly
Americans are covered by Medicare, and poor Americans are
covered by Medicaid, the elderly poor are covered by both
programs. These beneficiaries are known as 'dual eligibles'").
Where an individual is dual eligible, and receives a health care
service that could be covered by either Medicare or Medicaid,
Medicare is to pay in the first instance. See Leavitt, supra;
42 U.S.C. § 1396a(a)(25)(A). This is because Medicaid is
designed to be a "payer of last resort." Arkansas Dep't of
Health & Human Servs. v. Ahlborn, 547 U.S. 268, 291 (2006).
Under this principle, Medicaid is not to be used to fund a
health care expense where another funding resource is available.
Shweiri v. Commonwealth, 416 Mass. 385, 388–389 (1993). The
Federal statutory and regulatory scheme outlines two methods for
ensuring that Medicaid remain the payer of last resort where
another funding resource is identified: "cost avoidance" and
"pay and chase." See Miller v. Gorski Wladyslaw Estate, 547
F.3d 273, 278 (5th Cir. 2008).
i. Cost avoidance. Cost avoidance is the primary method
of ensuring that Medicaid funds are not used where another
funding resource is available. See id. States are required to
"take all reasonable measures to ascertain the legal liability
of third parties . . . to pay for care and services available
7
under the plan" before paying out Medicaid funds. See 42 U.S.C.
§ 1396a(a)(25)(A). A third party is defined as "any individual,
entity or program that is or may be liable to pay all or part of
the expenditures for medical assistance furnished under a State
plan." 42 C.F.R. § 433.136 (2010). Reasonable measures include
the submission of a plan to the Secretary of HHS "for pursuing
claims against such third parties." 42 U.S.C.
§ 1396(a)(25)(A)(ii). In accordance with these requirements,
Massachusetts has promulgated a regulation mandating that
providers make "diligent efforts to obtain payment first from
other resources . . . so that the MassHealth agency will be the
payer of last resort." 130 Code Mass. Regs. § 450.316 (2019).
Where a State is able to establish the "probable existence"
of third-party liability at the time when a claim is filed, "the
agency must reject the claim and return it to the provider for a
determination of the amount of liability." 42 C.F.R.
§ 433.139(b)(1) (2019). Once such a liability determination is
made, "the agency must then pay the claim to the extent that
payment allowed under the agency's payment schedule exceeds the
amount of the third party's payment." 42 C.F.R.
§ 433.139(b)(1). Where probable third-party liability cannot be
established, or where benefits are not available at the time the
claim is filed, the State Medicaid agency is responsible for
paying the claim. See 42 C.F.R. § 433.139(c).
8
ii. Pay and chase. In the regular course, the
Commonwealth's "diligent efforts" requirement ensures that
MassHealth does not pay for health care services that could have
been paid for by a third-party insurer. See 130 Code Mass.
Regs. § 450.316. Instances arise, however, where a liable third
party is identified after Medicaid has already paid the
provider. For example, individuals who are eligible for
Medicaid may become retroactively eligible for Medicare as well.
See, e.g., 42 C.F.R. § 406.6(d)(4) (2019) (individual who signs
up for Medicare Part A coverage at some point after he or she
first becomes eligible is entitled to retroactive benefits).
Such individuals are referred to as "retroactive dual
eligibles." In such instances, Medicaid employs the secondary
"pay and chase" method of handling third-party liability, which
consists of the following:
"in any case where such a [third-party] legal liability is
found to exist after medical assistance has been made
available on behalf of the individual and where the amount
of reimbursement the State can reasonably expect to recover
exceeds the costs of such recovery, the State or local
agency will seek reimbursement for such assistance to the
extent of such legal liability."
42 U.S.C. § 1396a(a)(25)(B).
Federal regulations further mandate that
"if [a State Medicaid] agency learns of the existence of a
liable third party after a claim is paid, or benefits
become available from a third party after a claim is paid,
the agency must seek recovery of reimbursement within
[sixty] days after the end of the month it learns of the
9
existence of the liable third party or benefits become
available."
42 C.F.R. § 433.139(d)(2).4 Reimbursement is to be sought
"unless the agency determines that recovery would not be cost
effective in accordance with" 42 C.F.R. § 433.139 (f). 42
C.F.R. § 433.139(d)(3). Recovery is considered cost effective
under 42 C.F.R. § 433.139(f) where "the amount [the State
Medicaid agency] reasonably expects to recover will be greater
than the cost of recovery." 42 C.F.R. § 433.139(f)(1). A
State's Medicaid "plan must specify the threshold amount or
other guideline that the agency uses in determining whether to
seek recovery of reimbursement from a liable third party, or
describe the process by which the agency determines that seeking
recovery of reimbursement would not be cost effective." 42
C.F.R. § 433.139(f)(2).
iii. Approaches to pay and chase. To address the
implementation of pay and chase for instances of post-payment
4 A State agency may request a waiver of the sixty-day
deadline for seeking reimbursement. See 42 C.F.R.
§ 433.139(e)(1). In order to obtain a waiver of this
requirement, however, a State agency must demonstrate that
imposing the sixty-day requirement is not cost effective. See
42 C.F.R. § 433.139(e)(1). In order to do so, the agency must
provide "adequate documentation" to the Center for Medicare &
Medicaid Services (CMS) as to the lack of cost effectiveness,
examples of which include "costs associated with billing, claims
recovery data, and a State analysis documenting a cost-effective
alternative that accomplishes the same task." 42 C.F.R.
§ 433.139(e)(1)(ii).
10
third-party liability, Massachusetts promulgated the following
regulation: "[i]f a third-party resource is identified after
the provider has already billed and received payment from the
MassHealth agency, the provider must promptly return any payment
it received from the MassHealth agency. The provider must bill
all third-party resources before resubmitting a claim to the
MassHealth agency." 130 Code Mass. Regs. § 450.316(F). In
other words, this regulation implements pay and chase by
allowing MassHealth to void a provider's claim and recoup the
money from the provider. The provider is then left to seek
payment from the third party itself, whether the third party is
a private insurer or Medicare. The instant litigation arose out
of a challenge to the legality of this regulation.
An alternative method for implementing pay and chase, and
the one that MassHealth presently relies on, is known as demand
billing. Under this method of recovery, MassHealth requests
that the provider submit a bill to Medicare and repay MassHealth
once Medicare has paid the provider. MassHealth contends that
demand billing results in significant delays in recovery, and
cannot be utilized where a Medicaid recipient becomes
retroactively eligible for Medicare more than twelve months
after the date of service, due to Medicare filing deadlines.
b. Procedural history. i. Initiation of suit and
Atlanticare I. In 1998, MassHealth brought enforcement actions
11
against the plaintiff hospitals, seeking reimbursement for
Medicaid funds that had been paid out to the providers.
Atlanticare I, 439 Mass. at 4-5. As this court explained:
"In the three years prior to [MassHealth]'s enforcement
action, each hospital had provided medical services to
individuals deemed eligible for Medicaid benefits. It is
undisputed that, in all but two instances not at issue
here, the hospitals made diligent efforts to identify
liable third-party insurers, in conformity with
[MassHealth]'s due diligence regulation. When the
hospitals were unable to identify liable third-party
insurers, they sought and received payment from
[MassHealth]. Subsequently, in 1998, [MassHealth] informed
the hospitals that it had identified third parties
responsible for the claims, and, pursuant to the
reimbursement regulation, ordered the hospitals to return
the Medicaid payments to [MassHealth] and to rebill the
liable third parties. In some instances, Medicare was the
newly discovered third party; the patients serviced by the
hospitals in those instances had become retroactively
eligible for Medicare benefits. In those instances, no
amount of 'diligent efforts' by the healthcare providers
would have identified a liable third-party insurer --
Medicare -- as Medicare provided the insurance coverage
retroactively, i.e., only after the healthcare services had
been provided. The remaining instances involved private
insurers."
Id. MassHealth prevailed in the administrative decisions that
ensued. See id. at 5. The hospitals sought review in Superior
Court, arguing that Federal law mandated that the State Medicaid
agency, rather than the health care provider, seek reimbursement
from liable third parties. Id. at 3, 5. A judge in the
Superior Court ruled in favor of the hospitals. Id. at 3. In
so ruling, the judge "declared the regulation unlawful to the
extent that it required the hospitals to return payments to
12
[MassHealth] and rebill liable third parties." Id. at 5.
MassHealth appealed, and this court transferred the case from
the Appeals Court on its own motion. Id. at 3.
In March 2003, we issued a decision affirming the Superior
Court's ruling and concluding that Federal law required
MassHealth to seek reimbursements directly from liable third
parties, including Medicare. See id. at 5. We held that "[t]he
natural reading of the text of [42 U.S.C.] § 1396a(a)(25)(B) is
that the State or local agency must seek reimbursement from a
liable third party, provided it is cost effective to do so."
Id. at 6. We also based our holding on the legislative history,
the corresponding Federal regulation, and the then-current 1990
State Medicaid manual issued by the Health Care Financing
Administration (HCFA).5 Id. at 8-10. More specifically, we
observed that 42 U.S.C. § 1396a(a)(25)(B) made numerous
references to liable third parties, but made no mention of
providers. Atlanticare I, supra at 6-7. The statute's
legislative history also indicated that Congress contemplated
seeking reimbursement from "liable third parties" (emphasis
omitted). Id. at 8. The cost-benefit analysis mandated by the
statute further implied that agencies would seek recovery from
5 The Health Care Financing Administration was the
predecessor to CMS. Massachusetts v. Sebelius, 638 F.3d 24, 28
n.6 (1st Cir. 2011).
13
third parties, as the cost of seeking recovery from a provider
would generally be de minimis. Id. at 7. Additionally, the
corresponding Federal regulations made explicit reference to
seeking reimbursement "from a liable third party" and similarly
contained cost-benefit analysis provisions (emphasis omitted).
Id. at 9. Finally, the 1990 HCFA manual set forth a pay and
chase method of reimbursement that required the State Medicaid
agency to "seek recovery of reimbursement from the third party"
(emphasis omitted). Id. at 10.
On this basis, we concluded that 42 U.S.C.
§ 1396a(a)(25)(B) required State Medicaid agencies to seek
reimbursement directly from the liable third party, not the
health care provider. Atlanticare I, 439 Mass. at 6-7. We
further stated that this interpretation of the statute "would be
entirely unremarkable were it not for [MassHealth's] view,
agreed to by the hospitals, that it cannot recover costs from
the liable third party when that party is Medicare." Id. at 11.
This court explicitly rejected that view, as we were "not
persuaded that it is impossible for [MassHealth] to obtain
reimbursement from Medicare." Id.
ii. Post-Atlanticare I developments. A few weeks after
this court released its decision in Atlanticare I, CMS issued a
letter from the State Medicaid director clarifying CMS's policy
as to the recovery of Medicaid payments for individuals who
14
become retroactive dual eligibles. The letter indicated that,
as a general matter, where Medicaid learns of a liable third
party after a claim is paid, or where retroactive benefits
become available after a claim is paid, State Medicaid agencies
"must seek recovery from that third party." The letter went on
to explain, however, that where the liable third party is
Medicare, neither the Federal statutory scheme nor Federal
regulations prohibit a State Medicaid agency from recovering its
payment directly from the provider. The defendant promptly
filed a petition for rehearing with this court in May 2003,
citing to the April 2003 letter from CMS. The petition was
denied without further comment.
CMS sent a letter dated December 30, 2003, to MassHealth in
response to questions that MassHealth had posed to the agency.
The letter explained CMS's position that the statute does
require the State to seek recovery from the liable third party,
but that where the liable third party is Medicare "there is no
statutory authority under Medicare to allow a [S]tate to seek
recovery and be paid directly from Medicare." In such
instances, CMS wrote, "the [S]tate may timely request the
provider to submit a bill timely to Medicare."
MassHealth filed an emergency motion to modify the
declaratory judgment, in light of the April 2003 and December
2003 letters from CMS, arguing that they constituted changed
15
circumstances warranting a modification of the declaratory
judgment, pursuant to Mass. R. Civ. P. 60 (b) (5), 365 Mass. 828
(1974).6 The Superior Court judge denied the motion, concluding
that none of the arguments advanced by the defendant
"establishes to this [c]ourt's satisfaction that there is no
possible way for [MassHealth] to recover from Medicare." The
judge also concluded that MassHealth's proposed modification to
the declaratory judgment was not suitably tailored to the
changed circumstance, because it "does not resolve the problem,"
but simply shifts the administrative costs from MassHealth onto
the providers.
In July 2004, a declaratory judgment was entered in the
Superior Court after rescript which provided in relevant part:
"It is further DECLARED that [MassHealth] lacks the
authority to implement 130 Code Mass. Regs. § 450.316(E)
[now renumbered § 450.316(F)] to the extent that the
regulation, by requiring hospitals to refund Medicaid
payments to [MassHealth] after the hospitals have complied
6 Rule 60 provides in relevant part:
"On motion and upon such terms as are just, the court may
relieve a party or his legal representative from a final
judgment, order, or proceeding for the following reasons:
. . . (5) the judgment has been satisfied, released, or
discharged, or a prior judgment upon which it is based has
been reversed or otherwise vacated, or it is no longer
equitable that the judgment should have prospective
application . . . . The motion shall be made within a
reasonable time . . . . A motion under this subdivision
(b) does not affect the finality of a judgment or suspend
its operation."
Mass. R. Civ. P. 60 (b), 365 Mass. 828 (1974).
16
with [MassHealth]'s due diligence regulation (130 Code
Mass. Regs. § 450.316) and received payment for their
services from [MassHealth] and [MassHealth] subsequently
learns that a third-party insurer (including Medicare) is
responsible for payment for all or part of the hospital's
services, is inconsistent with the Supreme Judicial Court's
interpretation of 42 U.S.C. § 1396a(a)(25)(B)."
iii. First Circuit decision. Subsequent to these
proceedings, MassHealth attempted to recover reimbursements for
retroactive dual eligibles directly from Medicare. See
Sebelius, 638 F.3d at 25. CMS refused to reimburse MassHealth,
however, maintaining its position that MassHealth must seek such
reimbursements from providers, not Medicare. Id. The
Commonwealth brought suit in Federal court. See id. A judge in
the Federal District Court for the District of Massachusetts
ruled that the Medicare statute prohibited MassHealth from
recovering reimbursements directly from CMS. Id.
On appeal, the First Circuit affirmed the District Court's
ruling. In so doing, it emphasized that the Medicare statute
required that a Medicare "payment for services furnished an
individual may be made only to providers of services." Id. at
31, quoting 42 U.S.C. § 1395f(a). Although recognizing that the
statute was not explicit on "whether the Commonwealth, which is
not a provider, may recover reimbursement directly from Medicare
in cases of retroactive dual eligibility," the First Circuit
concluded that "[i]n this statutory context, it is most natural
to read reimbursement as a particular type of payment."
17
Sebelius, 638 F.3d at 31, 32. As "[t]he Medicare statute
equates reimbursement and payment and does not allow non-
providers to receive payments from Medicare," the Commonwealth
could not recover directly from Medicare. Id. at 31. The First
Circuit further noted that the Commonwealth "is not included
among any of the express allowances in the Medicare statute for
non-providers to receive payments." Id.
The First Circuit also provided an "alternative holding"
that CMS's interpretation of its regulations as prohibiting
direct reimbursement to State Medicaid agencies was entitled to
deference. Sebelius, 638 F.3d at 33. In this regard, the First
Circuit had a much more expansive record of the agency's
interpretation than was presented to this court, including the
letter dated December 2003, which stated that "there is no
statutory authority under Medicare to allow a State to seek
recovery and be paid directly from Medicare," as well as a
letter from CMS to the Commonwealth dated June 2005 that
reiterated that "there is no statutory authority for reimbursing
Medicaid directly for services rendered to Medicare
beneficiaries." Id. at 34.
Given the statutory language and CMS's regulatory guidance,
the First Circuit determined that the Commonwealth could not
seek direct reimbursement from Medicare but would instead need
to utilize another means of recovery. The First Circuit
18
determined that the Commonwealth could nonetheless recover
reimbursements "by asking providers to return [S]tate Medicaid
funds," as the Federal statutory scheme did not preclude
MassHealth from doing so. Id. at 32. This procedure, known as
demand billing, was apparently raised by CMS as a viable
alternative to direct reimbursement from Medicare. See id. at
34. The First Circuit also considered "CMS bound by its
representation as to the mechanisms available for the
Commonwealth to seek and recover reimbursement." Id. at 36.
In the wake of the First Circuit's decision, MassHealth
began using demand billing to address the issue of retroactive
dual eligibles. As discussed, under this method of recovery,
MassHealth requests that the provider submit a bill to Medicare
and repay MassHealth once Medicare has paid the provider.
According to MassHealth, this solution works, but only to a
point. Because Medicare requires that providers submit claims
within twelve months of the date of service, MassHealth asserts
that it cannot rely on demand billing where a Medicaid recipient
becomes retroactively eligible for Medicare more than twelve
months after the day of service, unless the State first voids
the Medicaid payment.
iv. Amendment of Medicare regulation. A few months before
the First Circuit issued its decision, a Federal Medicare
regulation pertaining to the deadline for filing certain
19
Medicare claims was amended, effective January 1, 2011.7 The
amendment followed the passage of the Affordable Care Act, which
had altered Medicare filing deadlines.8 See Pub. L. No. 111-148,
7 The regulation applies to both services furnished under
Part A of Medicare as well as services furnished under Part B,
where applicable. See 75 Fed. Reg. 73170, 73450 (Nov. 29,
2010). See Briggs v. Commonwealth, 429 Mass. 241, 243 (1999)
("Medicare Part A essentially covers hospital, post-hospital,
and other inpatient services, and coverage is automatic. . . .
Medicare Part B is a supplemental, voluntary insurance program
providing coverage for physician and outpatient services"
[citation and footnote omitted]).
8 In their entirety, the two filing exceptions under 42
C.F.R. § 424.44(b)(2)-(b)(3) (2019) provide:
"(2) The time for filing a claim will be extended if CMS or
one of its contractors determines that a failure to meet
the deadline in paragraph (a) of this section is caused by
all of the following conditions:
"(i) At the time the service was furnished the beneficiary
was not entitled to Medicare.
"(ii) The beneficiary subsequently received notification of
Medicare entitlement effective retroactively to or before
the date of the furnished service.
"(3) The time for filing a claim will be extended if CMS or
one of its contractors determines that a failure to meet
the deadline in paragraph (a) of this section is caused by
all of the following conditions:
"(i) At the time the service was furnished the beneficiary
was not entitled to Medicare.
"(ii) The beneficiary subsequently received notification of
Medicare entitlement effective retroactively to or before
the date of the furnished service.
20
§ 6404(a)(1), 124 Stat. 767 (2010). The regulatory amendments
allowed for new exceptions to the Medicare filing deadline in
light of these statutory changes.
The first exception provides that the filing deadline will
be extended if the failure to meet the deadline is due to the
fact that: "(i) [a]t the time the service was furnished the
beneficiary was not entitled to Medicare;" and "(ii) [t]he
beneficiary subsequently received notification of Medicare
entitlement effective retroactively to or before the date of the
furnished service." 42 C.F.R. § 424.44(b)(2). In such
"(iii) A State Medicaid agency recovered the Medicaid
payment for the furnished service from a provider or
supplier 6 months or more after the service was furnished."
The extensions afforded to each exception are as follows:
"(ii) If CMS or one of its contractors determines that both
of the conditions are met in paragraph (b)(2) of this
section but that all of the conditions in paragraph (b)(3)
are not satisfied, the time to file a claim will be
extended through the last day of the sixth calendar month
following the month in which either the beneficiary or the
provider or supplier received notification of Medicare
entitlement effective retroactively to or before the date
of the furnished service.
"(iii) If CMS or one of its contractors determines that all
of the conditions are met in paragraph (b)(3) of this
section, the time to file a claim will be extended through
the last day of the sixth calendar month following the
month in which the State Medicaid agency recovered the
Medicaid payment for the furnished service from the
provider or supplier."
42 C.F.R. § 424.44(b)(5).
21
instances, the filing deadline will be extended six months from
the date that the beneficiary or provider is notified of
retroactive Medicare entitlement. 42 C.F.R. § 424.44(b)(5)(ii).
The second exception provides that the filing deadline will
be extended if the failure to meet the deadline is due to the
above two conditions, along with a third condition: that the
"State Medicaid agency recovered the Medicaid payment for the
furnished service from a provider or supplier [six] months or
more after the service was furnished" (emphasis added). 42
C.F.R. § 424.44(b)(3). In such instances, the filing deadline
will be extended six months from the date "in which the State
Medicaid agency recovered the Medicaid payment for the furnished
service from the provider or supplier" (emphasis added). 42
C.F.R. § 424.44(b)(5)(iii). The reference to providers in 42
C.F.R. § 424.44(b)(3) explicitly contemplates that State
Medicaid agencies will recover a payment from a health care
provider where an individual becomes retroactively dual eligible
for Medicaid and Medicare. This particular exception to the
filing deadline is designed to allow for providers to recover
from Medicare in such instances, where their claim would
otherwise be barred by the passage of time. The Commonwealth
contends that our ruling in Atlanticare I, which requires
MassHealth to seek reimbursement directly from Medicare, not the
provider, precludes the use of this procedure.
22
v. Proceedings leading to the instant appeal. On
September 28, 2018, the defendant filed a motion for relief from
the judgment in light of the First Circuit's decision and the
regulatory amendment to 42 C.F.R. § 424.44. The motion was
denied. The defendant appealed, and we granted the defendant's
application for direct appellate review.
MassHealth seeks a modification of the declaratory judgment
such that it may seek reimbursements from providers, rather than
continuing to seek reimbursements directly from Medicare and
other liable third parties.9 The agency estimates that it is
unable to recover approximately $5.3 million per year in claims
that should have been paid out by Medicare once a recipient's
retroactive dual eligibility became known. MassHealth also has
indicated that it is unaware of any State that faces the same
prohibition on recovering Medicaid payments directly from
providers.10
9 Although MassHealth requests the ability to seek
reimbursement from providers as a general matter, MassHealth
contends that such a modification of the judgment would have
"little, if any" impact on providers where the third-party
insurer is not Medicare. This is because MassHealth already has
a direct right of recovery against non-Medicare insurers under
G. L. c. 118E, § 22, and MassHealth contends that it has a
general practice of seeking payment directly from the private
insurers themselves, rather than from providers.
10CMS apparently represented to the First Circuit that the
"standard procedure across the country" for recovering
reimbursements from Medicare is to employ demand billing.
23
The agency contends that, in light of the First Circuit's
ruling, it has been placed in an untenable position of
attempting to follow two contradictory holdings: this court's
ruling in Atlanticare I that MassHealth must seek reimbursements
directly from liable third parties, and the First Circuit's
ruling that MassHealth is prohibited from seeking reimbursements
directly from Medicare.
2. Discussion. a. Standard of review. The defendant
seeks a modification of the declaratory judgment pursuant to
Mass. R. Civ. P. 60 (b) (5). Rule 60 (b) (5) allows the court
to relieve a party from a final judgment where "a prior judgment
upon which it is based has been reversed or otherwise vacated,
or it is no longer equitable that the judgment should have
Sebelius, 638 F.3d at 36 n.13. By contrast, MassHealth asserts
that it is aware of nine other States that seek reimbursement
directly from the provider where Medicare is the retroactively
liable third party: Maine, Vermont, California, Ohio,
Pennsylvania, Alabama, Wyoming, Michigan, and Minnesota.
MassHealth has further indicated that it is unaware of any State
that requires its State Medicaid agency to seek reimbursements
from Medicare directly.
It would appear, however, that a few States do in fact
require their State Medicaid agency to pursue Medicare directly.
See Tex. Government Code § 531.0392 (b) (2020) ("The commission
shall obtain Medicaid reimbursement from each fiscal
intermediary who makes a payment to a service provider on behalf
of the Medicare program"). See also South Dakota Admin. Rules
§ 22:02:02:10 (2020) ("[A] county must pursue the availability
of a third-party payment source . . . such as Medicare").
Exactly how that is done is not clear from the record or the
regulatory language.
24
prospective application." As the 1973 Reporter's Notes
indicate, Rule 60 (b) (5) is designed to allow "relief from a
judgment which was valid and equitable when rendered but whose
prospective application has, because of changed conditions,
become inequitable." Reporters' Notes (1973) to Rule 60, Mass.
Ann. Laws Court Rules, Rules of Civil Procedure (LexisNexis
2019). The rule "derives from the traditional power of a court
of equity to modify its decree in light of changed
circumstances." Mitchell v. Mitchell, 62 Mass. App. Ct. 769,
778 (2005). The moving party thus bears the burden of
demonstrating a "significant change in circumstances warranting
revision" of the judgment (quotations and citation omitted).
Great Woods, Inc. v. Clemmey, 89 Mass. App. Ct. 788, 795 (2016).
See MacDonald v. Caruso, 467 Mass. 382, 388-389 (2014). One
example of such changed circumstances would be a "later change
in the law[,] such as when a statute is amended." Clean Harbors
of Braintree, Inc. v. Board of Health of Braintree, 415 Mass.
876, 884–885 (1993). See Horne v. Flores, 557 U.S. 433, 447-448
(2009) (under Federal analog, changed circumstances, such as
"changes in governing law or its interpretation by the courts,"
may "warrant reexamination of the original judgment").
The resolution of motions for relief from judgment "rests
in the discretion of the trial judge." Wojcicki v. Caragher,
447 Mass. 200, 209 (2006). Accordingly, the "denial of a motion
25
under Rule 60 (b) will be set aside only on a clear showing of
an abuse of discretion." Murphy v. Administrator of the Div. of
Personnel Admin., 377 Mass. 217, 227 (1979).
b. Timing of motion. As a threshold matter, the
plaintiffs contend that the defendant's motion is untimely. The
plaintiffs note that both changed circumstances cited by
MassHealth -- the amendment to 42 C.F.R. § 424.44 and the First
Circuit's ruling -- occurred in 2011, seven years before
MassHealth sought modification of the judgment. The motion
judge observed that MassHealth "has offered no reason for having
waited seven plus years to bring the instant [m]otion," but did
not go so far as to conclude that the motion was untimely.
A motion under Mass. R. Civ. P. 60 (b) (4)-(6) must be made
"within a reasonable time," which is to be determined in light
of all of the circumstances of the case. Such determinations,
however, are "addressed solely to the judge's discretion."
Chavoor v. Lewis, 383 Mass. 801, 805 n.4 (1981). "In
determining whether a motion was filed within a reasonable time,
a judge may consider the reasons for delay; the ability of the
movant to learn of the grounds earlier; prejudice to the
parties, if any; and the important interest of finality." Owens
v. Mukendi, 448 Mass. 66, 74 (2006).
There is no set formula for determining what constitutes a
"reasonable time" for the purposes of Mass. R. Civ. P. 60 (b)
26
(4)-(6). It is indisputable that a significant period of time
elapsed between the First Circuit's ruling and the filing of the
Rule 60 motion in this case -- indeed a much longer span of time
than we have deemed unreasonable in other cases. See Owens, 448
Mass. at 76-77 and cases cited (delays of two or three years
found to be unreasonable). We consider this delay troubling to
say the least, particularly given that MassHealth's
justification for its failure to promptly seek modification of
the judgment is somewhat murky. At oral arguments, MassHealth
suggested that the passage of the Affordable Care Act in 2010
prompted a sea change in health care that required MassHealth to
focus on more fundamental Medicaid issues, such as changes to
eligibility requirements, and that this contributed to the
lengthy delay in addressing the reimbursement issue. We
understand that the delay also may be due in part to
MassHealth's concern that it would be asking this court to
reconsider one of its own decisions -- indeed a decision that
was unanimous, and in which the court summarily denied a
petition for reconsideration, even after further regulatory
guidance from CMS.
More importantly, however, we recognize that clear
resolution of this issue is critical, given the substantial
amount of public funds at stake and the need to avoid
conflicting interpretations by this court and the First Circuit
27
that would lead to confusion and administrative deadlock. Cf.
United States v. 119.67 Acres of Land, More or Less, Situated in
Plaquemines Parish, State of La., 663 F.2d 1328, 1331 (5th Cir.
1981) (motion filed under Fed. R. Civ. P. 60(b)(6) should not be
dismissed as untimely "[g]iven the significant governmental and
public rights involved in this controversy"). Moreover, the
risk of prejudice to the plaintiffs of delay is diminished by
the fact that MassHealth is only seeking a prospective
modification of the declaratory judgment. In light of the
important interests at stake, the need for clarity, and the
diminished risk of prejudice to the plaintiffs, we conclude that
the motion is not untimely in the highly unusual circumstances
of this case.
c. Existence of changed circumstances. The judge below
found that MassHealth had failed to demonstrate changed
circumstances warranting modification of the declaratory
judgment. The judge observed that the relevant statutory
provision at issue in Atlanticare I, 42 U.S.C.
§ 1396a(a)(25)(B), had not been amended since this court's
ruling. Additionally, the motion judge noted that this court
was at least aware of the possibility that MassHealth might be
unable to recover reimbursements directly from Medicare, but
issued the Atlanticare I decision nonetheless. Finally, the
motion judge concluded that the reference to provider-based
28
reimbursement in 42 C.F.R. § 424.44 was too vague to constitute
explicit recognition of a State Medicaid's agency ability to
pursue reimbursement from a provider where the third-party
insurer is Medicare.
To determine whether MassHealth has demonstrated a change
in circumstances warranting a modification of the declaratory
judgment, we first look to the circumstances as they existed at
the time of our ruling in Atlanticare I. As discussed, in
Atlanticare I, 439 Mass. at 11, this court rejected MassHealth's
argument that it was not possible to seek reimbursements
directly from Medicare. A number of reasons motivated this
conclusion. First, we observed that neither party had
identified a Federal regulation specifically applicable to
instances "in which Medicare has acknowledged a mistake in
denying liability for a claim or has agreed to pay a claim
retroactively." Id. Second, we identified two Federal cases,
New York State Dep't of Social Servs. v. Bowen, 846 F.2d 129 (2d
Cir. 1988), and Michigan Dep't of Social Servs. v. Shalala, 859
F. Supp. 1113 (W.D. Mich. 1994), that "rejected the rationale
underlying [MassHealth's] position." Atlanticare I, supra at
11-12. At the same time, MassHealth had "cited no case that
supports the proposition that it cannot pursue reimbursement
from Medicare in the circumstances of this case." Id. at 13.
Third, we stated that while the HCFA had issued a letter in 1991
29
reflecting a "general position" that State Medicaid agencies
could not recover from Medicare, we considered it "of no
consequence that HCFA has not yet adopted the reasoning of
another court to the contrary." Id. Fourth, we observed that
"nothing in the record . . . suggest[s] that [MassHealth] has
ever attempted to recover reimbursement from Medicare, or that
it has been rebuffed in any attempts to do so." Id. And
finally, both parties had conceded at oral arguments that "it
might be possible for [MassHealth] to recover from Medicare."
Id. at 11 n.14.
Although our reasoning was understandable at the time,
postjudgment legal developments have altered the basis for each
of the rationales cited. First, while the parties were unable
to identify a Federal regulation that specifically addressed
retroactive Medicare liability in the context of retroactive
dual eligibles, the amended version of 42 C.F.R. § 424.44 now
does so, albeit obliquely.11 While § 424.44 pertains to the
filing deadline for Medicare claims, rather than the ability to
pay out funds to State Medicaid agencies, it explicitly
11The oblique nature of the reference is unsurprising,
given that Medicare, much like Medicaid, is an incredibly
complicated statutory scheme. See Schweiker v. Gray Panthers,
453 U.S. 34, 43 (1981). The law that established both programs
is known for its "Byzantine construction," id., which makes it
"almost unintelligible to the uninitiated." Id., quoting
Friedman v. Berger, 547 F.2d 724, 727 n.7 (2d Cir. 1976), cert.
denied, 430 U.S. 984 (1977).
30
contemplates that State Medicaid agencies will seek
reimbursement from providers, and providers will seek payment
from Medicare. See Tarin v. Commissioner of the Div. of Med.
Assistance, 424 Mass. 743, 751 (1997) (Federal Medicaid
regulations entitled to substantial deference). CMS's Medicare
claims processing manual, dated January 21, 2011, similarly
makes reference to a State Medicaid agency "recoup[ing] the
money it paid the provider or supplier." The April 2003 letter
issued by CMS less than a month after our holding in Atlanticare
I further reiterates that neither the Federal statutory scheme
nor Federal regulations prohibit a State Medicaid agency from
recovering its payment directly from the provider where the
liable third party is Medicare. Even more explicit, however, is
CMS's December 2003 letter to MassHealth, which states that
"there is no statutory authority under Medicare to allow a
[S]tate to seek recovery and be paid directly from Medicare."
In such instances, CMS stated, "the [S]tate may timely request
the provider to submit a bill timely to Medicare." A June 2005
letter further confirmed that "there is no statutory authority
for reimbursing Medicaid directly for services rendered to
Medicare beneficiaries." Sebelius, 638 F.3d at 34.
As to the two cases we cited in support of MassHealth's
ability to directly seek reimbursement from Medicare, subsequent
developments in the case law constitute a clear change in
31
circumstances from Atlanticare I. In New York State Dep't of
Social Servs., 846 F.2d at 130, upon which this court relied in
Atlanticare I, the United States Court of Appeals for the Second
Circuit held that the State Medicaid agency had standing to
appeal from the denial of nursing home patients' Medicare
claims. We cited that case as suggestive of a State Medicaid
agency's authority to seek reimbursement directly from Medicare.
Atlanticare I, 439 Mass. at 11. More recently, however, in the
context of Medicare claims for home health care services, the
Second Circuit deferred to CMS's position that such claims must
be filed by providers, not Medicare beneficiaries or State
Medicaid agencies. Leavitt, 428 F.3d at 146. See also
Charlotte-Mecklenburg Hosp. Auth. v. North Carolina Dep't of
Health & Human Servs., 201 N.C. App. 70, 77 (2009) ("only
providers of services can submit Medicare reimbursement claims
on behalf of Medicaid recipients later determined to be eligible
for Medicare"). In so holding, the Second Circuit concluded
that State Medicaid agencies could obtain reimbursements from
providers using demand billing. See Leavitt, supra at 149.
Of course, the most obvious, significant change in the case
law since Atlanticare I is that the First Circuit has now
definitively stated that MassHealth may not seek reimbursement
directly from Medicare. Notably, although CMS's predecessor,
HCFA, was not a party to Atlanticare I and did not submit an
32
amicus brief to the court, CMS was a party to the First Circuit
litigation and was able to outline the agency's position
unequivocally. It is clear from the Sebelius litigation that
CMS takes the position that State Medicaid agencies may not
pursue reimbursement directly from Medicare.
Finally, the record before us is now clear that MassHealth
has attempted to recover from Medicare directly and has been
unable to do so. Initially, this was only because CMS took a
stance that Medicare could not pay out funds to MassHealth, but
CMS's view has now also been endorsed by the First Circuit. In
sum, post-Atlanticare I changes to the Federal law have made
clear what remained ambiguous at the time of our prior decision
-- that it is not possible for MassHealth to recover from
Medicare directly.
Despite these significant developments in the years since
Atlanticare I, the plaintiffs reiterate that the language of 42
U.S.C. § 1396a(a)(25)(B) has not changed, and the Federal
Medicaid regulations in place at the time were adequate to
indicate that direct recovery was not going to be possible. For
the reasons discussed supra, however, we consider the law to
have changed significantly, or at least to have been
significantly clarified, since our original decision.
The plaintiffs also rely on our previous discussion of the
cost-benefit analysis requirement in Atlanticare I, arguing that
33
this requirement would serve little purpose if State Medicaid
agencies were allowed to seek reimbursement from providers,
rather than from liable third parties. The statute premises
reimbursement on a finding that "the amount of reimbursement the
State can reasonably expect to recover exceeds the costs of such
recovery." 42 U.S.C. § 1396a(a)(25)(B). As we observed in
passing in Atlanticare I, if a State Medicaid agency is able to
seek reimbursement from a provider, "realistically, there are
few instances in which the cost of such recovery would exceed
the amount of the recovery." Atlanticare I, 439 Mass. at 7.
Thus, we reasoned, if Congress intended to allow State Medicaid
agencies to seek reimbursement from providers, this provision
would be rendered "largely superfluous," as the cost-benefit
analysis would reliably weigh in favor of seeking reimbursement.
Id.
Although the regulations are less than clear about which
party's costs need to be considered, we recognize that
MassHealth would be unlikely to consider reimbursement not cost
effective if it could simply shift the costs of recovery to the
providers. With that consideration in mind, however, and after
reviewing the regulations, we conclude that the costs to
providers may and should be given consideration.
The regulations indicate that seeking reimbursement is
considered cost effective where "the amount [the State Medicaid
34
agency] reasonably expects to recover will be greater than the
cost of recovery." 42 C.F.R. § 433.139(f)(1). The regulations
do not, however, define the scope of what fairly may be
considered in calculating the "cost of recovery." Further,
where a State requests a waiver of the sixty-day deadline for
seeking reimbursement due to lack of cost effectiveness, see
note 4, supra, the regulation explains that providing adequate
documentation of such would include "costs associated with
billing, claims recovery data, and a State analysis documenting
a cost-effective alternative." 42 C.F.R. § 433.139(e)(1)(ii).
Albeit that these examples are in reference to requesting a
waiver of the sixty-day deadline, we find these examples also to
be illustrative of the kinds of information that may be
considered in conducting a cost-benefit analysis for the purpose
of seeking reimbursement; and two of the three examples provided
easily could pertain to the costs associated with providers.
Thus, we conclude that when MassHealth seeks to recover payments
made to providers and require them to seek reimbursement from
Medicare, any associated costs to providers of doing so may be
properly considered.
That being said, this factor does not change our analysis
in this case. In the original administrative proceedings from
which this case originates, testimony was heard as to the nature
of the burden placed on providers who had been tasked with
35
chasing after third parties for payment. No evidence has been
included in the record presently before this court as to the
administrative cost that would be placed on providers of
pursuing Medicare, or the extent to which such costs would be
offset by the increased compensation rate from Medicare.
Moreover, it is unclear to what extent the costs of recovery may
be substantially alleviated by the use of computerized
recordkeeping and data storage, something that is much more
widespread now than at the time of our original decision.
In sum, given subsequent developments in the Federal law –-
primarily, the additional administrative guidance from CMS, the
First Circuit's ruling in Sebelius, and the amendments to 42
C.F.R. § 424.44 -- we conclude that it was an abuse of
discretion to find that MassHealth had failed to show a change
in circumstances since Atlanticare I. Medicaid is designed to
be a payer of last resort, and it would be "illogical to suggest
. . . that the statutory and regulatory scheme of Medicare
abrogates" this principle. New York Dep't of Social Servs., 846
F.2d at 134. Because MassHealth cannot recover reimbursements
directly from Medicare, the best way to harmonize these
statutory schemes is to conclude that while State Medicaid
agencies are generally expected to seek reimbursements directly
from liable third parties, the State agency may instead seek
reimbursement from the provider if the liable third party is
36
Medicare. Cf. Leavitt, 428 F.3d at 146 (deference to agency
interpretation particularly warranted where it provides
"reasonable resolution of an apparent conflict" between two
Federal regulations).
d. Modification of judgment. Separate and apart from the
issue of changed circumstances, the motion judge also concluded
that the agency's proposed modification of the judgment was not
"suitably tailored" to any such change in circumstances.12 The
judge observed that while MassHealth relied on Medicare-related
developments to justify its request for modification, MassHealth
nonetheless sought a wholesale reversal of Atlanticare I as it
pertained to all liable third parties.
We agree that MassHealth's proposed modification sweeps too
broadly. In its motion, MassHealth requests modification of the
judgment "so that MassHealth may resume enforcing a regulation
(now codified at 130 [Code Mass. Regs.] § 450.316(F)) in order
12The motion judge's reference to "suitable tailoring"
derives from jurisprudence concerning the Federal analog to
Mass. R. Civ. P. 60. See Rufo v. Inmates of Suffolk County
Jail, 502 U.S. 367, 391 (1992). The parties adopt this standard
in their briefing as well. Under Fed. R. Civ. P. 60, once a
moving party has satisfied its burden of demonstrating changed
circumstances, the court must "determine whether the proposed
modification is suitably tailored to the changed circumstance."
Rufo, supra at 391. We have cited to Rufo in the context of
discussing Mass. R. Civ. P. 60, but we have never explicitly
adopted a "suitable tailoring" requirement. See MacDonald v.
Caruso, 467 Mass. 382, 388 (2014). For the purposes of this
decision, we assume, without deciding, that suitable tailoring
is required under our rule as well.
37
to pursue reimbursement from a previously-paid provider when a
third party entity becomes retroactively liable." Yet
enforcement of the regulation as written would apply to all
post-payment third-party reimbursements, not just those sought
from Medicare. As discussed supra, the changed circumstances
that warrant a modification of the judgment pertain specifically
to retroactive Medicare liability, not all third-party
liability. MassHealth has further failed to provide a rationale
for modifying the judgment beyond its applicability to Medicare
reimbursements. Indeed, in its reply brief, MassHealth
indicates that this is a nonissue for other third parties
because MassHealth already has a direct right of recovery
against non-Medicare insurers under G. L. c. 118E, § 22, and
MassHealth has a general practice of seeking payment of
liabilities due to third-party insurance coverage directly from
the insurers themselves, rather than from providers.
To determine the appropriate scope of modification of the
judgment, we therefore examine the practical impact of the
changed circumstances on the administrability of the final
judgment. In the wake of the First Circuit's ruling, MassHealth
cannot recover reimbursements directly from Medicare for
services provided to retroactive dual eligibles. MassHealth
currently utilizes demand billing instead –- a process by which
MassHealth requests that the provider submit a bill to Medicare
38
and repay MassHealth once Medicare has paid the provider.
MassHealth asserts that this solution does not permit MassHealth
to pursue reimbursements where retroactive Medicare eligibility
is discovered more than twelve months after the service was
performed, in light of Medicare's twelve-month filing deadline.
MassHealth notes that the Medicare filing deadline exception
outlined in 42 C.F.R. § 424.44(b)(3), which is designed to
address reimbursements to State Medicaid agencies, is contingent
upon the State first voiding the Medicaid payment.13
13Neither party addresses the Medicare filing deadline
exception contained within 42 C.F.R. § 424.44(b)(2). This
exception is not contingent upon the voiding of the Medicaid
payment, unlike the exception provided by 42 C.F.R.
§ 424.44(b)(3), and triggers a six-month extension of the filing
deadline from the date that the beneficiary or provider was
notified of Medicare entitlement. Indeed, CMS explicitly
declined to "create an additional exception [to the regulation]
to permit providers and suppliers to submit claims for services
at the request of a Medicaid State Agency prior to the State
Medicaid Agency actually recovering the payment," because CMS
believed the exception under 42 C.F.R. § 424.44(b)(2) was
sufficient to account for such instances. 75 Fed. Reg. 73448-
73449 (Nov. 29, 2010). Title 42 C.F.R. § 424.44(b)(2) does not,
however, provide as favorable of a filing deadline extension as
42 C.F.R. § 424.44(b)(3). This is because the six-month
extension provided by 42 C.F.R. § 424.44(b)(2) commences as soon
as the provider or beneficiary is notified of Medicare
eligibility, while the six-month extension provided by 42 C.F.R.
§ 424.44(b)(3) does not commence until MassHealth recovers the
payment.
We also note that neither party addressed the relevance of
a Federal regulatory provision that appears to have contemplated
that State Medicaid agencies would pursue a waiver of the sixty-
day deadline for seeking reimbursement where the liable third
party is Medicare:
39
We conclude that changed circumstances justify the
elimination of the restrictions imposed by Atlanticare I that
declared that MassHealth does not have the authority to require
that health care providers return payment to MassHealth in the
event that Medicare is later identified as a liable third party.
Those restrictions were imposed based on the incorrect
assumption that MassHealth could and should pursue reimbursement
directly from Medicare. Given that MassHealth cannot pursue
Medicare directly, and the permissible length of time for
seeking reimbursements may be conditioned on whether MassHealth
sought and received reimbursement from providers, see 42 C.F.R.
§ 433.139(d)(2), we conclude that it is appropriate to modify
the declaratory judgment to allow MassHealth to require
reimbursement from providers where a health care service was
rendered to an individual who retroactively became eligible for
Medicare.
As mentioned previously, the original declaratory judgment
entered in this case provided as follows:
"An agency requesting a waiver of the requirements
specifically concerning either the [sixty]–day limit in
paragraph (d)(1) or (d)(2) of this section must submit
documentation of written agreement between the agency and
the third party, including Medicare fiscal intermediaries
and carriers, that extension of the billing requirement is
agreeable to all parties."
42 C.F.R. § 433.139(e)(4).
40
"It is further DECLARED that [MassHealth] lacks the
authority to implement 130 Code Mass. Regs. § 450.316(E)
[now renumbered § 450.316(F)] to the extent that the
regulation, by requiring hospitals to refund Medicaid
payments to [MassHealth] after the hospitals have complied
with [MassHealth]'s due diligence regulation (130 Code
Mass. Regs. § 450.316) and received payment for their
services from [MassHealth] and [MassHealth] subsequently
learns that a third-party insurer (including Medicare) is
responsible for payment for all or part of the hospital's
services, is inconsistent with the Supreme Judicial Court's
interpretation of 42 U.S.C. § 1396a(a)(25)(B)."
The declaratory judgment is to be modified so as to excise the
parenthetical "(including Medicare)" and to append the following
statement to the end of the declaration: "Notwithstanding the
above, MassHealth retains the authority to implement 130 Code
Mass. Regs. § 450.316(E) [now renumbered § 450.316(F)] if the
third-party insurer is identified as Medicare. In accordance
with § 450.316(F), MassHealth may require a provider to
reimburse MassHealth where a health care service was rendered to
an individual who later became retroactively eligible for
Medicare. The provider must then bill Medicare before
resubmitting a claim to MassHealth." This modification shall be
prospective only, applicable to reimbursements sought for
services performed subsequent to the date of this decision.
3. Conclusion. For the foregoing reasons, we conclude
that changed circumstances require modification of the
declaratory judgment entered pursuant to our holding in
Atlanticare I. Accordingly, we order that this case be remanded
41
to the Superior Court for modification of the judgment in
accordance with this opinion.
So ordered.