In a recent decision, the United States Court of Appeals for the Ninth Circuit affirmed dismissal of a medical provider’s complaint against a Medicare Advantage Organization (“MAO”) because the provider failed to exhaust all administrative remedies under the Medicare Act. Glob. Rescue Jets, LLC v. Kaiser Found. Health Plan, Inc., 30 F.4th 905 (9th Cir. 2022).
In Global Rescue, an air ambulance provider flew two Medicare Advantage members from Mexico to San Diego. Id. at 908–09. The provider and the member’s MAO did not have a contract, which otherwise would have set the rate of payment. Id. at 910. Therefore, the out-of-network provider billed its “usual and customary” rates. Id. at 909. The MAO, however, “paid only a fraction of the billed amount.” Id. The provider then “vigorously disputed” the alleged underpayments, and sought reconsideration for at least one of the claims. Id. at 910. Even so, the provider failed to pursue at least three additional steps in the administrative review process. Id. at 915.
Instead, the provider filed suit for the additional money it believed it was owed. Id. at 910. The trial court dismissed the complaint on jurisdictional grounds, as the provider admittedly failed to exhaust all of Medicare’s administrative remedies. Id. at 911. The provider appealed, arguing that exhaustion was not required and, to the extent it was, “should have been excused.” Id. at 909.
The Ninth Circuit affirmed. It described traditional Medicare’s five-step appeals process and the benefits it provides. Id. at 911–13. These include “reducing the burden on courts,” having the benefit of agency “experience and expertise,” and “compil[ing] a record” that “is adequate for judicial review.” Id. at 913 (internal quotation marks and citation omitted). The Court noted that Congress had applied traditional Medicare’s administrative appeals scheme—with only “slight revisions”—to disputes between MAOs and their enrollees. Id. Therefore, the Court held that “the constraints on judicial review” under traditional Medicare “apply equally to claims for benefits” administered by a MAO. Id. at 914. The Court also found that “the same rationale for requiring exhaustion under original Medicare applies to” MAOs “as well.” Id.
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