Will it succeed?

SACRAMENTO, Calif. -- Depending on who you talk to, Medicare's decision to appeal a district court decision that limits medical necessity documentation to the CMN is either exactly the right move or a very risky proposition. On May 4, the U.S. Attorney's Office appealed the Maximum Comfort ruling to the Ninth Circuit Court of Appeals. In Maximum Comfort, U.S. District Court Judge Lawrence Karlton wrote: "Any medical necessity information required from medical equipment suppliers may be submitted to the Secretary only by way of a Certificate of Medical Necessity, and not by other means, such as obtaining Medicare beneficiaries' medical records." Karlton's ruling applies only to providers in the Eastern District of California. If the Court of Appeals upholds that ruling, however, it will apply to a much greater geography. That would be a major victory for the HME industry, which has long argued CMS relies too heavily on information beyond the CMN -- particularly doctors' progress notes, which are often incomplete -- during post-payment audits. "What's interesting in Maximum Comfort is that at no time has a district court said this is a difficult case, that this is something we are going to have to do our best to muddle through," said attorney Neil Caesar, president of the Health Law Center in Greenville, S.C. The lower court decision, he added, was a "slam dunk." Judge Karlton clearly found no statutory language that allows CMS to request information beyond a CMN to prove medical justification. In the Maximum Comfort case, Karlton ruled that CMS was wrong to demand that the HME's owner, Tom Lambert, repay Medicare $600,000 for not supplying documentation beyond the CMN to prove medical necessity for power wheelchair claims. "As far as I'm concerned, Judge Karlton was right on the head," said Lambert's attorney, Bart Fleharty. "The statute is clear on its face. We're confident that we are going to prevail at the ninth circuit." Not everyone, however, shares Fleharty's optimism. "The reason it is not surprising that they would appeal is because, legally, Maximum Comfort is a very weak ruling -- it is poorly reasoned," said an industry attorney who requested anonymity. "It doesn't have a chance of surviving an appeal in the ninth circuit. I don't think CMS is taking a very big risk." The fact that CMS is appealing shows it is confident of a victory, said another attorney. When it comes to determining whether CMS can request information beyond the CMN to determine medical necessity, there is no statutory language that states specifically that it can't, the attorney said. "Legally, there is room to differ," he said. Fleharty expects the circuit court to hear the case sometime in early 2006.