Medicare Beneficiary challenges Local Coverage Determination as conflicting with NCD

In Greenwald v. Becerra (D. D.C. June 7, 2022), a Medicare beneficiary who had lymphedema (a chronic medical condition that results in the
accumulation of fluid in the subcutaneous tissues of his legs) and other medical conditions sought coverage for a pneumatic compression device (PCD). PCDs are durable medical equipment designed to treat patients suffering from a range of circulatory conditions, including lymphedema. Mr. Greenwald’s physician attempted to treat the condition with compression stockings, exercise, and limb elevation, but the treatments were ineffective so he prescribed a PCD. Medicare denied coverage and Greenwald appealed.

On review, the Court noted Medicare does not cover “expenses incurred for items or services which . . . are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member[.]” 42 U.S.C. § 1395y(a)(1)(A). After a provider seeks reimbursement for an item or service provided to a Medicare beneficiary, the Medicare Administrative Contractor (MAC) assesses whether the item or service is covered by Medicare, including whether the item or service is “reasonable and necessary” under § 1395y.

CMS has significant control over coverage determinations. CMS can issue regulations or national coverage determinations concerning specific items and services. In addition, MACs can issue local coverage determinations where there is no specific CMS guidance to facilitate coverage determinations. If coverage is initially denied by a MAC, a Medicare beneficiary may appeal the MAC determination to an administrative law judge (“ALJ”) housed within the Secretary’s Office of Medicare Hearings and Appeals. Unsuccessful appeals may be further appealed to the HHS Departmental Appeals Board (“DAB”). Neither the ALJ nor the DAB is bound by the LCD, but they cannot invalidate or set aside the LCD in its entirety. If there are “no material issues of fact in dispute” and the “only issue of law” is the validity of the LCD, the Medicare recipient may also side-step the usual administrative review process and file a complaint directly with “a court of competent jurisdiction.” 42 U.S.C. § 1395ff(f)(3).

PCDs are subject to a national coverage determination and, in this case, a local coverage determination. Mr. Greeenwald alleged those determinations conflict and thee LCD introduced new legal standards for determining Medicare coverage that were not included or mentioned in the NCD. Mr. Greeenwald did not request reconsideration of his coverage determination, instead bringing a civil action challenging the LCD as invalid due to the alleged conflict. Medicare filed a motion to dismiss and Mr. Greenwald filed a motion for summary judgment. After reviewing multiple briefs by each party, the magistrate granted Mediare’s motion to dismiss for lack of subject matter jurisdiction. Mr. Greenwald objected to the magistrate’s findings resulting in the District Court’s review. Because a defect in standing is a defect in subject matter jurisdiction, Mr. Greeenwald’s standing was the issue.

There are three requirements for standing:

First, the plaintiff must have suffered an “injury in fact”—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) “actual or imminent, not ‘conjectural’ or ‘hypothetical.’” Second, there must be a causal connection between the injury and the conduct complained of—the injury has to be “fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court.” Third, it must be “likely,” as opposed to merely “speculative,” that the injury will be “redressed by a favorable decision.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992).

Greenwald argued that this Court has subject matter jurisdiction over this matter under 28 U.S.C. § 1331 (federal question jurisdiction) and 28 U.S.C. § 1346 (United States as defendant), because it involves an agency of the United States as a defendant, and because it involves the interpretation and application of the laws of the United States, including the Administrative Procedure Act and Title XVIII of the Social Security Act. Medicare responded alleging subject matter jurisdiction did not exist because Greenwald was no longer seeking the relief that his denied claim be reversed and covered under Medicare Part B, and therefore has no stake in the outcome of this matter, and because Greenwald did not exhaust his administrative remedies. The magistrate granted Medicare’s motion to dismiss after finding the “undisputed facts are insufficient to demonstrate whether NCD 280.6 and LCD L33829 conflict as a matter of law,” a conflict which would render LCD L33829 invalid.

The District Court found that the magistrate erred by finding that additional facts were necessary to determine whether the NCD and LCD confict. The District Court found there was a conflict evident in the plain language of the text and additional facts would not eliminate the conflict. Even though Greenwald would not be compensated for his PCD, he had standing because he continues to suffer from lymphedema and had an interest in ensuring he is not in the future denied a PCD for his ongoing chronic lymphedema because of an invalid LCD. Accordingly, the magistrate’s decision was rejected (in part – the District Court agreed Greenwald had no standing to allege the Secretary violated the non-discretionary duty imposed by 42 U.S.C. § 1395ff(1)) with the District Court finding Greenwald had standing to challenge the LCD.