Mercy Gen. Hosp. v. Azar (344 F. Supp. 3d 321, 2018)

(1) The debt must be related to covered services and derived from deductible and coinsurance amounts.

(2) The provider must be able to establish that reasonable collection efforts were made.

(3) The debt was actually uncollectible when claimed as worthless.

(4) Sound business judgment established that there was no likelihood of recovery at any time in the future.

Id.

Chapter 3 of CMS's Provider Reimbursement Manual ("PRM") provides further instruction regarding the requirements for bad debt reimbursement. As to the second bad debt criterion, regarding "reasonable collection efforts," § 310 provides that "a reasonable collection effort ... must involve the issuance of a bill on or shortly after discharge or death of the beneficiary to the party responsible for the patient's personal financial obligations." CMS Pub. 15-1, § 310 (hereinafter "PRM"). However, § 312, which addresses bad debts associated with "indigent or medically indigent" patients, provides that "[o]nce indigence is determined and the provider concludes that there ha[s] been no improvement in the beneficiary's financial condition, the debt may be deemed uncollectible without applying the §[ ]310 procedures." Id. § 312. To determine indigency, § 312 instructs that "[p]roviders can deem Medicare beneficiaries indigent or medically indigent when such individuals have also been determined eligible for Medicaid as either categorically needy individuals or medically needy individuals, respectively." Id."Otherwise, the provider should apply its customary methods for determining the indigence of patients to the case of the Medicare beneficiary, under [PRM] guidelines[,]" including that "[t]he provider must determine that no source other than the patient would be legally responsible for the patient's medical bill; e.g., title XIX [ (Medicaid) ], local welfare agency[,] and guardian[.]" Id.

Finally, § 322 of the PRM provides specific instruction on bad debts associated with dual eligible patients. Id. § 322. It provides that

[w]here the State is obligated either by statute or under the terms of its [Medicaid] plan to pay all, or any part, of the Medicare deductible or coinsurance amounts, those amounts are not allowable as bad debts under Medicare. [However, a]ny portion of such deductible or coinsurance amounts that the State is not obligated to pay can be included as a bad debt under Medicare, provided that the requirements of §[ ]312 or, if applicable, §[ ]310 are met.

Id. Additionally, § 322 addresses situations in which "the State has an obligation to pay, but either does not pay anything or pays only part of the deductible or coinsurance because of a State payment 'ceiling.' " Id. Section 322 instructs that, "[i]n these situations, any portion of the deductible or coinsurance that the State does not pay that remains unpaid by the patient[ ] can be included as a bad debt under Medicare, provided that the requirements of §[ ]312 are met." Id.

4. The "Bad Debt Moratorium"

"In 1986, the [I]nspector [G]eneral of [HHS] had proposed either eliminating bad debt reimbursement entirely or attempting to recoup the costs by garnishing the Social Security checks of debtors." Hennepin Cty. Med. Ctr., 81 F.3d at 747. Although "[n]either proposal was adopted[,] [t]he [I]nspector [G]eneral then called for much closer examination of providers' bad debt requests." Id."On August 1, 1987, in an attempt to shield Medicare providers from the Inspector General's proposed policy changes, Congress enacted [legislation that] became known as the Bad Debt Moratorium." Foothill Hosp.-Morris L. Johnston Mem'l v. Leavitt, 558 F.Supp.2d 1, 3 (D.D.C. 2008) ; see also Hennepin Cty. Med. Ctr., 81 F.3d at 750-51 ("In passing the moratorium, Congress was motivated to prevent unexpected consequences to providers from the [I]nspector [G]eneral's proposed changes in the criteria for bad debt reimbursement."). The legislation, which amended the Medicare Act, sought to " 'freeze' the Secretary's Medicare bad debt reimbursement policies." Mountain States Health All. v. Burwell, 128 F.Supp.3d 195, 200 (D.D.C. 2015). Specifically, it provided that

[i]n making payments to hospitals under [the Medicare program], the Secretary ... shall not make any change in the policy in effect on August 1, 1987, with respect to payment under [the Medicare program] to providers of service for reasonable costs relating to unrecovered costs associated with unpaid deductible and coinsurance amounts incurred under [the Medicare program] (including criteria for what constitutes a reasonable collection effort).

Omnibus Budget Reconciliation Act (OBRA) of 1987, Pub. L. No. 100-203, § 4008(c), 101 Stat. 1330, 1330-55 (codified at 42 U.S.C. § 1395f note).

Following the legislation's enactment, "the [I]nspector [G]eneral continued to urge closer scrutiny of bad debt requests." Hennepin Cty. Med. Ctr., 81 F.3d at 747.

Thus, in 1988, Congress amended the Medicare Act a second time to clarify that criteria for what constitutes a "reasonable collection effort ... includ[ed] criteria for indigency determination procedures, for record keeping, and for determining whether to refer a claim to an external collection agency." Technical and Miscellaneous Revenue Act of 1988, Pub. L. No. 100-647, § 8402, 102 Stat. 3342, 3798 (codified at 42 U.S.C. § 1395f note). The amendment's legislative history makes clear that the amendment was intended to address Congress's "concern[s] about recommendations made by the Inspector General ... subsequent to August 1, 1987, ... [that] appear[ed] to create requirements in addition to those in the Secretary's regulations, the decisions of the ... Board, and relevant program manual and issuances." HR Conf. Rep. No. 100-1104 (1988), as reprinted in 1988 U.S.C.C.A.N. 5048, 5337. However, the amendment was "not intend[ed] to preclude the Secretary from disallowing bad debt payments based on regulations, [Board] decisions, manuals, and issuance[s] [ ] in effect prior to August 1, 1987." Id. The Bad Debt Moratorium ended on October 1, 2012. See Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. No. 112-96, tit. III, § 3201(d), 126 Stat. 156, 192-93 (codified at 42 U.S.C. § 1395f note).

5. PRM § 1102.3L and JSM-370

In November 1995, CMS revised its guidance in the PRM regarding reimbursement of bad debts associated with dual eligibles. Specifically, it revised § 1102.3L to read as follows:

Evidence of the bad debt arising from Medicare/Medicaid crossovers may include a copy of the Medicaid remittance showing the crossover claim and resulting Medicaid payment or nonpayment. However, it may not be necessary for a provider to actually bill the Medicaid program to establish a Medicare crossover bad debt where the provider can establish that Medicaid is not responsible for payment. In lieu of billing the Medicaid program, the provider must furnish documentation of:

- Medicaid eligibility at the time services were rendered (via valid Medicaid eligibility number), and

- Non-payment that would have occurred if the crossover claim had actually been filed with Medicaid.

The payment calculation will be audited based on the state's Medicaid plan in effect on the date that services were furnished.

AR 1248-49.

However, on August 10, 2004, CMS issued a memorandum, known as JSM-370, which "changed the language in ... [§] 1102.3L to revert back to pre-1995 language, which requires providers to bill the individual states for dual eligibles' co-[insurance] and deductibles before claiming Medicare bad debt." AR 1608. According to this memorandum, CMS changed § 1102.3L's language "[a]s a result of [a] Ninth Circuit decision," which had "found [§] 1102.3L to be inconsistent with the Secretary's must[-]bill policy." AR 1607-08 (citing Cmty. Hosp. of the Monterey Peninsula v. Thompson, 323 F.3d 782 (9th Cir. 2003) ). The memorandum further explained that the Secretary's "must[-]bill" policy provides that "where the state owes none or only a portion of [a] dual[ ]eligible patient's deductible or co-pay, the unpaid liability for the bad debt is not reimbursable to the provider by Medicare until the provider bills the State[ ] and the State refuses payment (with a State Remittance Advice)." AR 1607. Finally, the memorandum includes a "directive to hold harmless providers that can demonstrate that they followed the instructions previously laid out at [§] 1102.3L[ ] for open cost reporting periods beginning prior to January 1, 2004." AR 1608. Specifically, CMS noted that "[i]ntermediaries who followed the now-obsolete [§] 1102.3L instructions for cost reporting periods prior to January 1, 2004[,] may reimburse providers they service for dual-eligible bad debts with respect to unsettled cost reports that were deemed allowable using other documentation in lieu of billing the state." AR 1608.

B. Factual Background

As noted earlier, the plaintiffs are acute care hospitals located in California that participate in both Medicare and Medi-Cal. See AR 12. At issue in this case are the plaintiffs' claims for Medicare reimbursement of unpaid deductible and coinsurance amounts associated with dual eligible patients, incurred between the fiscal years ending in October 1995 and December 2004. See AR 2-3. During these fiscal years, the plaintiffs "billed [Medi-Cal] for some of the dual eligible patients but due to various factors related to the billing process they decided[ ] ... to stop billing, alleging that it was not cost effective" for them to bill Medi-Cal. AR 12 n.13. Among the problems they encountered were that "Medi-Cal [ ] failed to issue remittance advices in some instances and also[,] ... as a result of [Medi-Cal's] payment ceiling, the Medi-Cal payments were often zero or only a dollar or two." AR 12. According to the plaintiffs, beginning "in 1992 and [ ] continu[ing] ... in 1995," they "gathered alternative documentation and submitted bad debt lists for billed and unbilled cross[ ]over claims ... for audit verification." Pls.' Objs. at 19. Additionally, "the [plaintiffs] contracted in 2007[ ] ... with" EDS Corporation ("EDS"), which they claim is "the same contractor used by ... California" to process crossover claims, "to produce reports to submit ... [to the intermediary] as [ ] alternative documentation to the State remittance advices" (the "EDS reports"). AR 12-13; see also AR 34 (explaining that the plaintiffs retained EDS "in order to ... generate certain reports 'for the purposes of identifying outpatient and inpatient bad debt payable by the Medicare program' ").

The plaintiffs' intermediary ultimately "disallowed the ... amounts" claimed by the plaintiffs because "there were no State Medicaid remittance advices," AR 12, i.e., a "receipt" for payment or non-payment, Motions Hrg. Tr. 5:9 (Feb. 2, 2018). Thereafter, the plaintiffs appealed the intermediary's determination to the Board, which held a hearing on the plaintiffs' claims on August 23 and 24, 2012. See AR 31-32. On September 14, 2015, the Board issued a decision affirming the intermediary's disallowance of the plaintiffs' claims, see AR 39, which the plaintiffs then appealed to the Administrator, see AR 2.

On November 12, 2015, the Administrator issued a decision affirming the Board's decision. AR 19. The Administrator concluded:

[R]egardless of any alleged omissions by the State to provide the Medicaid remittance advices and the payment ceiling, or the alleged financial inconvenience [to the plaintiffs], the [plaintiffs] were required to bill for and produce [ ] remittance advices as a condition of including crossover bad debt claims on [their] cost report[s]. Accordingly, the[ir] failure to produce Medicaid remittance advices represent[ed] a failure on the part of the [p]roviders to meet the necessary criteria for Medicare payment of bad debts related to these claims and the [intermediary] was correct to deny the crossover bad debt claims for the cost years at issue.

AR 13. Additionally, regarding the "require[ment] to bill for and produce [ ] remittance advices," AR 13, referred to collectively by the Administrator as the Secretary's "must-bill policy," the Administrator found:

[T]he [B]ad [D]ebt [M]oratorium d[id] not prohibit the disallowances in this case ... [because t]he must-bill policy [ ] has been in effect since before August 1, 1987, as is evidenced in numerous Administrator and Board decisions[,] ... the longstanding PRM sections 310[,] [ ] 312[,] and 322, ... [and] the longstanding regulations and [Medicare] statute[, which] require showing a debt is worthless as claimed and that reasonable collection efforts have been met[,] and ... maintaining [ ] contemporaneous documentation to support a claim.

AR 15. The Administrator further found that "any relief CMS grants based on a [p]rovider's reliance on [PRM §] 1102.3L is set forth under [the] criteria of the JSM[-370] 'hold harmless' policy," and that the plaintiffs did not qualify for such relief because they "d[id] not show that in [the] past years the [plaintiffs] had claimed and [ ] the [intermediary] had[ ] ... allowed payment under [§] 1102.3L." AR 17. Alternatively, the Administrator found that "[§] 1102.3L ... require[s] documentation reflecting 'data available from [a provider's] basic accounts, as usually maintained,' " AR 16 (quoting 42 C.F.R. § 413.26(a) ), and "the [plaintiffs] ha[d] not maintained 'contemporaneous documentation in the ordinary course of business to support their claims[,]' which in fact[ ] the State remittance advices represent," AR 16-17. Finally, the Administrator rejected "the [plaintiffs]' contentions that the EDS reports qualif[ied] as remittance advices ... [because] the EDS reports [we]re not contemporaneously generated State documents[ ] ... [and] were not validated, certified[,] or adopted as State documents." AR 18.

On January 19, 2016, the plaintiffs filed this action seeking judicial review of the Administrator's decision. See Compl. at 1. Thereafter, the parties filed their cross-motions for summary judgment, which the Court referred to a magistrate judge for a report and recommendation. See Order at 1 (Jan. 20, 2016). On August 18, 2017, Magistrate Judge Robinson issued her Report and Recommendation, which recommended that the Court affirm the Administrator's decision, deny the plaintiffs' motion for summary judgment, and grant the Secretary's cross-motion for summary judgment. See R & R at 30. The Magistrate Judge specifically concluded that because "three provisions of the PRM [that] form the Secretary's must-bill policy ...

were in place prior to [ ] 1987[,] ... the must-bill policy does not violate the Moratorium." Id. at 15. Additionally, she found that the must-bill policy was "further identified" in a 1985 CMS Medicare Intermediary Manual (the "1985 Intermediary Manual") and also "consistently applied in several administrative decisions." Id. at 18. The Magistrate Judge further concluded that the Administrator's "application of the must-bill policy to both ceiling and non-ceiling cases [wa]s not plainly erroneous or inconsistent with the regulations," and thus, not arbitrary and capricious. Id. at 16. Finally, the Magistrate Judge concluded that the Administrator's "rejection of the [plaintiffs'] EDS reports ... was not arbitrary and capricious or an abuse of discretion." Id. at 30.

II. STANDARDS OF REVIEW

A. Objections to Report and Recommendation

Federal Rule of Civil Procedure 72(b) governs the Court's resolution of objections to a magistrate judge's report and recommendation on dispositive motions. The Rule provides that "[t]he district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to." Fed. R. Civ. P. 72(b)(3). Accordingly, "only those issues that the parties have raised in their objections to the Magistrate Judge's report [and recommendation] will be reviewed by th[e] court.... [Thus], objecting to only certain portions of the Magistrate Judge's report 'does not preserve all the objections one may have.' " Aikens v. Shalala, 956 F.Supp. 14, 19-20 (D.D.C. 1997) (citations omitted). Upon completing a review of the parties' objections, "[t]he district judge may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions." Fed. R. Civ. P. 72(b)(3).

B. Summary Judgment in Agency Review Cases Under Rule 56(a)

A moving party is entitled to summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). However, because this Court must review the final decisions of the Secretary under the applicable provisions of the Administrative Procedure Act ("APA"), see 42 U.S.C. § 1395oo(f)(1) (incorporating the "applicable provisions under chapter 7 of Title 5 [of the United States Code]"), the typical summary judgment standards set forth in Federal Rule of Civil Procedure 56 are not applicable, see Stuttering Found. of Am. v. Springer, 498 F.Supp.2d 203, 207 (D.D.C. 2007), aff'd, 408 F. App'x 383 (D.C. Cir. 2010). "Under the APA, it is the role of the agency to resolve factual issues to arrive at a decision that is supported by the administrative record, whereas 'the function of the district court is to determine whether or not as a matter of law the evidence in the administrative record permitted the agency to make the decision it did.' " Id. (quoting Occidental Eng'g Co. v. Immigration Naturalization Serv., 753 F.2d 766, 769-70 (9th Cir. 1985) ). In other words, "when a party seeks review of agency action under the APA, the district judge sits as an appellate tribunal," and "[t]he 'entire case' on review is a question of law."

Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001) (footnote and citations omitted).

The APA requires courts to "hold unlawful and set aside agency action, findings, and conclusions" that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). However, "[t]he scope of review under the 'arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency." Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). Nonetheless, "the agency must examine the relevant data and articulate a satisfactory explanation for its action including a 'rational connection between the facts found and the choice made.' " Id. (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962) ). However, "[c]ourts 'will uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned.' " Pub. Citizen, Inc. v. Fed. Aviation Admin., 988 F.2d 186, 197 (D.C. Cir. 1993) (quoting Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281, 286, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974) ).

An agency's factual findings must be "supported by substantial evidence on the record as a whole." Arkansas v. Oklahoma, 503 U.S. 91, 113, 112 S.Ct. 1046, 117 L.Ed.2d 239 (1992). "The 'substantial evidence' standard requires more than a scintilla, but can be satisfied by something less than a preponderance of the evidence." Fla. Gas Transmission Co. v. Fed. Energy Regulatory Comm'n, 604 F.3d 636, 645 (D.C. Cir. 2010) (quoting FPL Energy Me. Hydro LLC v. Fed. Energy Regulatory Comm'n, 287 F.3d 1151, 1160 (D.C. Cir. 2002) ). Put differently, it "is the amount of evidence constituting 'enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn ... is one of fact for the jury.' " Kay v. FCC, 396 F.3d 1184, 1188 (D.C. Cir. 2005) (quoting Ill. Cent. R.R. v. Norfolk & W. Ry., 385 U.S. 57, 66, 87 S.Ct. 255, 17 L.Ed.2d 162 (1966) ). In determining whether an agency's factual finding is supported by substantial evidence, "weighing the evidence is not the court's function," United Steel Workers v. Pension Ben. Guar. Corp., 707 F.3d 319, 325 (D.C. Cir. 2013), and "the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence," Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966). Ultimately, the substantial evidence standard is "highly deferential," and "requir[es] only 'such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' " Rossello ex rel. Rossello v. Astrue, 529 F.3d 1181, 1185 (D.C. Cir. 2008) (quoting Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988) ); see also Robinson v. Nat'l Transp. Safety Bd., 28 F.3d 210, 215 (D.C. Cir. 1994) (under the substantial evidence standard, "[t]he court's function is to determine only whether the agency ... could fairly and reasonably find the facts that it did" (internal citations and quotation marks omitted) ).

III. ANALYSIS

As already explained, the Administrator denied the plaintiffs' claims for Medicare reimbursement of unpaid deductibles and coinsurance pursuant to the Secretary's "must-bill policy," AR 15, which requires providers seeking Medicare reimbursement for bad debts associated with dual eligibles to (1) bill the state Medicaid program (the "billing requirement") and (2) obtain and submit to the intermediary a remittance advice from the state Medicaid program (the "remittance advice requirement"), see AR 13 (explaining that the must-bill policy "require[s] [providers] to bill for and produce remittance advices as a condition of including crossover bad debt claims on [their] cost report[s]"). The Administrator denied the plaintiffs' claims for failing to satisfy the remittance advice requirement. See AR 13 ("[T]he [plaintiffs'] failure to produce the Medicaid remittance advices represent[ed] a failure ... to meet the necessary criteria for Medicare payment of bad debts[,] ... [and] the [intermediary] was correct to deny the [plaintiffs'] crossover bad debt claims[.]"). In opposition to this conclusion, the plaintiffs argue that (1) "[t]he Secretary's purported must-bill policy ... was not in place prior to August 1, 1987, and therefore violates the Moratorium," Pls.' Objs. at 3, or, alternatively, even if the must-bill policy is lawful: (2) "the Secretary should be ordered to accept the alternative documentation the [p]laintiffs submitted" under "PRM [§] 1102.3L, which clearly provided that providers could submit proper alternative documentation in lieu of billing the State[ ] ... and which was applicable to the [p]laintiffs' cost years at issue," id. at 17; and (3) the plaintiffs' "EDS [reports] were the equivalent of remittance advices from the State, and[, therefore,] rejecting them was improper," id. at 24. For the reasons explained below, because the Court concludes that the Administrator erred by finding that a remittance advice requirement existed prior to August 1, 1987, and thus, did not violate the Moratorium, the Court must remand this case to the Secretary for further proceedings without addressing the plaintiffs' remaining arguments.

A. The Alleged Violation of the Bad Debt Moratorium

The Administrator concluded that the Secretary's must-bill policy did not violate the Bad Debt Moratorium based on his finding that the "policy [ ] ha[d] been in effect since before August 1, 1987, as is evidenced in numerous Administrator and Board decisions, ... the longstanding PRM sections 310 and 312 and 322, ... [and] the longstanding regulations and statute." AR 16. The Magistrate Judge agreed with the Administrator's conclusion, specifically "find[ing] that the must-bill policy was established through the three cited portions of the PRM, was further identified in the [1985 Intermediary Manual], and was consistently applied in several administrative decisions." R & R at 18. The plaintiffs object to the Magistrate Judge's finding that a must-bill policy existed prior to the Moratorium on numerous grounds. Specifically, they argue that the Magistrate Judge (1) "applied the wrong standard and misconstrued [the p]laintiffs' [action] as one challenging whether the must[-]bill policy is reasonable," Pls.' Objs. at 3; (2) "erred by finding [that] the PRM provisions established the must[-]bill policy because those provisions do not by their plain terms establish the must[-]bill policy, nor is there substantial evidence to support the position that the Secretary interpreted them as establishing such a policy before the Moratorium,"id. at 12; (3) "misapplied administrative decisions, correctly noting that they are incapable of setting policy but incorrectly construing them as evidence of the existence of the must[-]bill policy," id. at 15; (4) "improperly considered a 1985 ... Intermediary Manual [ ] provision ... that [ ] is not part of the [a]dministrative [r]ecord in this case," id. at 13; and (5) erred by "not giv[ing] any weight to the unchallenged testimony at the [Board hearing] that senior officials at CMS were emphatic that no must[-]bill policy existed prior to the Moratorium," id. at 16.

As an initial matter, the Court notes that so far as it is aware, the issue of whether the Secretary's must-bill policy violates the Moratorium has not been decided by any other court. Although a number of courts, including this Circuit, have addressed whether the Secretary's must-bill policy is owed judicial deference, see, e.g., Grossmont Hosp. Corp., 797 F.3d at 1086 (deferring to the Secretary's interpretation of its regulations because "[t]here [wa]s no indication that the Secretary's interpretation is contrary to law or to the agency's intent at the time of the adoption"), none has specifically addressed whether the must-bill policy constitutes a change in policy in violation of the Moratorium, see, e.g., id. at 1084 (finding that the plaintiff "failed to preserve its challenge that the mandatory state determination policy violates the ... [M]oratorium"). Thus, despite the Secretary's insistence that the Administrator's decision "must be affirmed because it is settled law, in this [C]ircuit and others, that the must-bill policy is valid," Def.'s Summ. J. Mem. at 14 (relying on Grossmont Hospital Corp. and other similar cases), none of the cases cited by the Secretary directly addresses the issue currently before the Court.

In its analysis of the issue, the Court will first address the plaintiffs' argument regarding the proper standard for the Court's review of the Administrator's finding that the Secretary's must-bill policy existed prior to the Moratorium. Next, because the Administrator relied only on the remittance advice requirement of the must-bill policy as the basis for rejecting the plaintiffs' claims, see AR 12, the Court's Moratorium analysis addresses the remittance advice requirement first.

1. The Proper Standard of Review

The plaintiffs assert that the Magistrate Judge "applied the wrong standard" in reviewing the "Administrator's conclusion that the must[-]bill policy did not violate the Moratorium." Pls.' Objs. at 3. Specifically, they argue that the Magistrate Judge's finding-"that the [Secretary's] application of the must[-]bill policy is not 'plainly erroneous or inconsistent' with the regulations," id. at 5 (quoting R & R at 16)-"invokes the familiar test of whether deference is due to an agency's interpretation of its regulations," id. at 6, and thus, "makes it ... apparent that the Report looked at the Moratorium issue from the perspective of whether the Secretary's must[-]bill policy is a reasonable interpretation of the regulations [to which the Court must defer], ... [rather than] from the (correct) perspective of whether[ ] ... [the Secretary's] factual finding[ ] ... [that] the must[-]bill policy existed prior to the Moratorium[ ] ... [was] '[ ]supported by substantial evidence,' " id. (quoting Dist. Hosp. Partners, L.P. v. Sebelius, 932 F.Supp.2d 194, 199 (D.D.C. 2013) ). They further argue that the Magistrate Judge's "citation to cases like Cove Associates Joint Venture v. Sebelius underscore[s] ... that the Report ... applied the wrong legal standard" because "[i]n [those cases], the Court did not find that the PRM provisions established the must[-]bill policy; rather, the Court deferred to the Secretary's interpretation that those 'ambiguous' [ ] provisions could reasonably be interpreted as establishing the must[-]bill policy." Id. at 9-10 n.7 (citing 848 F.Supp.2d 13, 25 (D.D.C. 2012) ). The Secretary does not directly respond to this argument, but generally asserts that "the Magistrate Judge [c]orrectly [c]oncluded [t]hat the [m]ust [b]ill [p]olicy [p]redated the Bad Debt Moratorium." Def.'s Objs. Resp. at 2.

The Court agrees with the plaintiffs that the Administrator's finding that the must-bill policy existed prior to August 1, 1987, is a factual one, and as such, the Court must review it under the substantial evidence standard. See Dist. Hosp. Partners, 932 F.Supp.2d at 200 (reviewing the Administrator's finding that the challenged policy predated the Bad Debt Moratorium under the substantial evidence standard); see also Cmty. Health Sys., Inc., 113 F.Supp.3d at 220 (same); Lakeland Reg'l Health Sys. v. Sebelius, 958 F.Supp.2d 1, 7 (D.D.C. 2013) (same). However, the Court cannot agree with the plaintiffs that it is "apparent" that the Magistrate Judge did not apply this standard. Pls.' Objs. at 6. Although the Magistrate Judge did not explicitly purport to apply the substantial evidence standard in reviewing the Administrator's finding, see generally R & R at 9-18 (not referencing the substantial evidence standard), her analysis is consistent with the application of that standard of review, as she analyzed evidence cited by the Administrator to determine whether it supported the Administrator's finding, see id. at 18 (concluding that "the must-bill policy was established through the three cited portions of the PRM, was further identified in the [1985 Intermediary Manual], and was consistently applied in several administrative decisions"). And, her citation to decisions holding that the must-bill policy is a reasonable interpretation of the bad debt regulations and the PRM provisions as support for her conclusion that "the [relevant] provisions of the PRM[ ] ... establish [the billing] requirement," id. at 14-15, appears to have been used only to bolster her independent analysis of the text of the PRM provisions, see id. at 13-15 (analyzing the PRM provisions and concluding that they "form the Secretary's must-bill policy"). Moreover, the Magistrate Judge's conclusion that "the Secretary's application of the must-bill policy ... is not plainly erroneous or inconsistent with the regulations," R & R at 16, does not demonstrate that the Magistrate Judge "engaged in the wrong analysis," Pls.' Objs. at 5. Notably, the Magistrate Judge's conclusion was reached in a section of the Report addressing "whether the Secretary's interpretation of the must-bill policy-i.e., that i[t] applies to both ceiling and non-ceiling cases alike-is arbitrary and capricious," R & R at 15-16, and did not purport to relate to the Magistrate Judge's preceding analysis of whether the Administrator properly concluded that the must-bill policy existed prior to the Moratorium, see id. at 9-15. Thus, although, for the reasons explained below, the Court reaches a different conclusion than the Magistrate Judge based on its own de novo assessment of the evidence cited by the Administrator, the Court declines to reject the Magistrate Judge's report and recommendation on the ground that she applied an incorrect standard of review.

2. Chapter 3 of the PRM

The Administrator concluded that sections 310, 312, and 322 of the PRM, "read[ ] ... together," demonstrate that "in situations where a State is liable for all or a portion of the deductible and coinsurance amounts, the State ... is to be billed and a remittance advice[ ] issued" "as a prerequisite of payment of the claim by Medicare as a bad debt." AR 14. The Magistrate Judge also concluded that "PRM [§§ 310, 312, and 322], taken together, establish a requirement that providers bill state Medicaid programs for dually eligible beneficiaries," and because these "provisions were in place prior to the ... Moratorium, ... the must-bill policy does not violate the Moratorium." R & R at 15. The plaintiffs object to the Magistrate Judge's conclusion, arguing that "although the [Report] may offer a plausible reading of the PRM, the Report's reading is in no way compelled by the plain language of the PRM," and thus, these PRM provisions do not support "the Administrator['s] [conclusion] that the Secretary's ... must[-]bill policy pre-dated the Moratorium." Pls.' Objs. at 7. The Secretary responds that the Magistrate Judge properly concluded that the PRM provisions "establish a requirement that providers bill State Medicaid programs for dually eligible beneficiaries." Def.'s Objs. Resp. at 3 (quoting R & R at 15). For the reasons explained below, the Court agrees with the plaintiffs that the plain language of the cited PRM provisions does not impose a remittance advice requirement.

As previously referenced, § 310 of the PRM, which addresses the "reasonable collection efforts" requirement for bad debt reimbursement under 42 C.F.R. § 413.89(e), provides that "a reasonable collection effort ... must involve the issuance of a bill on or shortly after discharge or death of the beneficiary to the party responsible for the patient's personal financial obligations." PRM § 310. Additionally, it provides that "[t]he provider's collection effort should be documented in the patient's file by copies of the bill(s), follow-up letters, reports of telephone and personal contact, etc." Id. § 310.B. Section 312, however, creates an exception to PRM § 310 for bad debts associated with "indigent or medically indigent" patients. Id. § 312. Specifically, it provides that "[o]nce indigence is determined and the provider concludes that there ha[s] been no improvement in the beneficiary's financial condition, the debt may be deemed uncollectible without applying the § 310 procedures." Id. (emphasis added). It further provides that to determine indigence, "[p]roviders can deem Medicare beneficiaries indigent or medically indigent when such individuals have also been determined eligible for Medicaid as either categorically needy individuals or medically needy individuals, respectively." Id."Otherwise, the provider should apply its customary methods for determining the indigence of patients to the case of the Medicare beneficiary, under [PRM] guidelines," including that "[t]he provider must determine that no source other than the patient would be legally responsible for the patient's medical bill; e.g., [Medicaid], local welfare agency[,] and guardian." Id.

Finally, § 322 provides instruction on bad debts associated with dual eligible patients in particular. Id. § 322. It provides:

Where the State is obligated either by statute or under the terms of its [Medicaid] plan to pay all, or any part, of the Medicare deductible or coinsurance amounts, those amounts are not allowable as bad debts under Medicare. Any portion of such deductible or coinsurance amounts that the State is not obligated to pay can be included as a bad debt under Medicare, provided that the requirements of §[ ]312 or, if applicable, §[ ]310 are met.

Id. Additionally, in situations in which "the State has an obligation to pay, but either does not pay anything or pays only part of the deductible or coinsurance because of a State payment 'ceiling,' " § 322 instructs that "any portion of the deductible or coinsurance that the State does not pay that remains unpaid by the patient, can be included as a bad debt under Medicare, provided that the requirements of §[ ]312 are met." Id.

Regarding these three sections of the PRM, the Administrator concluded:

Section 310 of the PRM generally requires a provider to issue a bill to the party responsible for the beneficiaries' payment. Section 312 of the PRM, while allowing a provider to deem a dually eligible patient indigent and claim the associated debt, first requires that no other party, including the State Medicaid program is responsible for payment. Section 322 of the PRM addresses the circumstances of dually eligible patients where there is a State payment ceiling. That section states that the 'amount that the State does not pay' may be reimbursed as a Medicare bad debt.... Reading the sections together, the Administrator concludes that, in situations where a State is liable for all or a portion of the deductible and coinsurance amounts, the State is the responsible party and is to be billed and a remittance advice[ ] issued in order to establish the amount of bad debts owed under Medicare.

AR 13-14. The Magistrate Judge, although reaching the same conclusion that these provisions established the must-bill policy, see R & R at 15, adopted a slightly different interpretation of these sections. Specifically, she concluded that § 312 does not "render[ ] the entirety of § 310 inapplicable to dually-eligible beneficiaries," but instead only "contemplate[s] that the strict requirements of § 310 need not apply to the issuance of a bill to the beneficiary, when the provider has determined that the beneficiary is indigent." Id. at 14. Moreover, she concluded that § 310, "read in conjunction with § 312, [makes it] apparent that the regulations require providers to submit bills to other [non-patient] sources," citing § 312's language that a "provider must determine that no source other than the patient would be legally responsible for the patient's medical bill; e.g., [Medicaid]." Id. (quoting PRM § 312.C). She further noted that notwithstanding any language in the PRM, "the provider must comply with 42 C.F.R. § 413.89(e), which requires that the provider make 'reasonable collection efforts.' " Id. Additionally, she concluded that § 322 provided further support for the applicability of §§ 310 and 312 to the providers in this case, as it "provides that any deductible and coinsurance amounts that are not paid by the state Medicaid program are 'allowable bad debts provided that the requirements of §[ ]312, or if applicable, §[ ]310 are met." Id. (quoting PRM § 322).

Although the plaintiffs "take no issue with [ ] PRM[ ] [§ 310's] requirement that the provider must generally bill the responsible party before claiming unpaid coinsurance and deductibles as bad debt[s]," they do "take issue with the Secretary's interpretation of the PRM sections as requiring providers to bill the State in order to determine whether or to what extent the State is the responsible party." Pls.' Objs. at 8. They argue that although § 312 requires the "provider [to] determine[ ] that no other party, including the state Medicaid program, is responsible for payment," Pls.' Objs. at 7, "[n]owhere does the PRM say that the only way a provider can determine the State is not responsible for payment is by billing the State," id. at 8. And they point out that, "[i]ndeed, as recognized by the Secretary himself, there are other ways to determine whether and the extent to which the State is responsible for payment," id. at 8-9, and "[t]he mere fact that [§] 3[1]2 of the PRM use[s] the language[,] '[t]he provider must determine[,]' indicates that the provider is able to make the determination of the State's liability on its own, albeit through information that is subject to verification," Pls.' Summ. J. Mem. at 29 n.13. They further argue that § 322 "does not impos[e] a requirement that the State must be billed," which is significant because it "contains an example that specifically contemplates ceiling cases like those at issue in this case." Pls.' Objs. at 7. Finally, they argue that "it is not enough that the Secretary can, for the first time after 1987, point to language in guidance and interpret that guidance as supporting the [must-bill] policy," because "even though th[e] PRM provisions did predate the Moratorium[,] ... the Secretary's interpretation [of them] in this case did not predate the Moratorium as a factual matter." Id. at 12.

Upon review of these PRM provisions, the Court agrees with the plaintiffs that they do not establish a remittance advice requirement or otherwise support that one existed prior to the Moratorium. Although it is undisputed that these provisions existed prior to the Moratorium, "that fact does not end the inquiry." Winder HMA LLC v. Burwell, 206 F.Supp.3d 22, 37 (D.D.C. 2016). Rather, "[t]he question facing the Court[ ] [ ] is whether the Secretary's current understanding of ... th[e] [provisions] is consistent with the agency's understanding of th[em] ... in 1987." Id.; see also Foothill Hosp., 558 F.Supp.2d at 10 (rejecting the Secretary's argument that "the [bad debt] regulation ... provide[d] sufficient support for [his] decision" because the Secretary "[wa]s confusing the regulation with his agency's interpretations of th[e] regulation. While [the regulation] certainly predate[d] the Moratorium, [his] current interpretation of [it] ... d[id] not.").

The Court cannot conclude that the plain language of these three PRM provisions establishes a remittance advice requirement. Notably, although the Administrator claims that these provisions "plainly require[ ] that the provider bill the State as a prerequisite of payment of the claim by Medicare as a bad debt," he does not make any such claim as to a remittance advice requirement, only asserting that such a requirement arises from "[r]eading the[se] sections together." AR 14. Beginning with § 310, although the Court agrees with the Administrator that the plain language of this provision "generally requires a provider to issue a bill to the party responsible for the beneficiaries' payment," AR 13, that section makes no reference to a remittance advice or any other documentation of a response from the state, see PRM § 310. Indeed, the portion of § 310 specifically addressing "[d]ocumentation required" only addresses "copies of bills" and does not refer to any documentation from the state. Id. § 310.B. In any event, § 310 appears to be inapplicable here because § 312, read literally, exempts providers from complying with that section when seeking reimbursement for dual eligible patients. See id. § 312 (stating that a "[p]rovider[ ] can deem Medicare beneficiaries indigent ... when such individuals have also been determined eligible for Medicaid," and "[o]nce indigence is determined and the provider concludes that there ha[s] been no improvement in the beneficiary's financial condition, the debt may be deemed uncollectible without applying the § 310 procedures" (emphasis added) ). Therefore, § 310 alone does not establish a remittance advice requirement.

Additionally, the Court cannot conclude that language in § 312.C establishes a remittance advice requirement either. First, although not raised by the plaintiffs, the plain language of § 312 renders § 312.C "literally inapplicable to Medicaid patients." Cmty. Hosp. of Monterey Peninsula, 323 F.3d at 795. As already explained, § 312 provides that a "[p]rovider[ ] can deem Medicare beneficiaries indigent ... when such individuals have also been determined eligible for Medicaid .... Otherwise, the provider should apply its customary methods for determining the indigence of patients ... under [certain] guidelines," PRM § 312 (emphasis added), which include that "[t]he provider must determine that no source other than the patient would be legally responsible for the patient's medical bill, e.g., [Medicaid]," id. § 312.C (emphasis added). Even assuming that § 312.C applies to all indigent patients, as the plaintiffs contend, that section nowhere states that a provider must receive a remittance advice from a state Medicaid program in order to "determine that no source other than the patient would be legally responsible for the patient's medical bill," id. § 312.C, and indeed, it does not establish any requirements for how a provider must make this determination, see id. Moreover, although the Administrator concluded that "[i]t is only through the State's records and claims system that the amount of any payment can be determined," AR 13; see also AR 8 ("The State maintains the most accurate patient information to make the determination of a patient's Medicaid eligibility status at the time of service and thus, to determine the State's cost sharing liability for unpaid Medicare deductibles and coinsurance."), as the plaintiffs point out, the Administrator's conclusion is undermined by the fact that CMS previously "recognized that there [a]re alternative methods for determining the State's responsibility for bad debts in ceiling cases" when it "promulgated section 1102.3L[ ] in November 1995," which provided that "in lieu of billing the State, ... [a] provider '[may] establish that Medicaid is not responsible for payment' by 'furnish[ing] documentation of ... [n]on payment that would have occurred if the crossover claim had actually been filed with Medicaid,' " Pls.' Summ. J. Mem. at 30 & n.14 (quoting AR 1248).

Therefore, § 312.C does not independently establish a remittance advice requirement.

Finally, the Court also cannot conclude that the plain language of § 322 imposes a remittance advice requirement. Again, like the other two provisions, § 322 does not explicitly impose any such requirement. The relevant language of § 322 provides as follows:

In some instances, the State has an obligation to pay, but either does not pay anything or pays only part of the deductible or coinsurance because of a State payment "ceiling." ... In these situations, any portion of the deductible or coinsurance that the State does not pay that remains unpaid by the patient, can be included as a bad debt under Medicare, provided that the requirements of § 312 are met.

PRM § 322. The Court is not persuaded by the Administrator's conclusion that § 322's reference to the amount that the State "does not pay," id., "presumes that the State has been billed as all responsible parties are expected to be billed," AR 8. Notably, the Administrator does not conclude that this language presumes that a state has denied payment, and in any event, the plain language of this provision does not reference a remittance advice or any other documentation reflecting a state's response and does not make apparent that any such documentation is required for Medicare reimbursement. Thus, § 322 does not independently establish a remittance advice requirement.

Finally, the Court is not persuaded by the Administrator's position that "[r]eading the[se] sections together" establishes a remittance advice requirement. AR 14. Because the Court has concluded that none of these provisions independently establishes a remittance advice requirement, or even refers to one, it cannot discern any reason to conclude that viewing these provisions together somehow creates that requirement. Thus, the Court concludes that PRM §§ 310, 312, and 322 do not demonstrate that a remittance advice requirement existed prior to the Moratorium.

The Secretary's additional counterarguments regarding these PRM provisions are also not persuasive. Specifically, the Secretary argues that "whether or not there might be another plausible interpretation of agency guidance, the Court must defer to the Secretary's interpretation unless it is plainly erroneous." Def.'s Objs. Resp. at 6. He further argues that a number of courts, including this Circuit, "ha[ve] concluded[ ] [that] the must-bill policy is a reasonable interpretation of a validly promulgated regulation." Def.'s Summ. J. Mem. at 14 (first citing Grossmont Hosp. Corp., 797 F.3d at 1085-86 ; then citing Me. Med. Ctr. v. Burwell, 775 F.3d 470, 479 (1st Cir. 2015) ; then citing Cmty. Hosp. of Monterey Peninsula, 323 F.3d at 792-93 ; then citing Cove Assocs. Joint Venture, 848 F.Supp.2d at 25 ; and then citing GCI Health Care Ctrs., Inc. v. Thompson, 209 F.Supp.2d 63, 71 (D.D.C. 2002) ). However, as another member of this Court has explained,

courts typically give substantial deference to an agency's interpretation of its own regulations[;] ... [however, t]he Bad Debt Moratorium complicates the deference issue, [ ] as it requires the Court to follow the agency's 1987 interpretation of its own regulations, rather than the agency's present-day interpretation of the same. Under the Moratorium, an otherwise "reasonable" interpretation of a bad-debt regulation, if inconsistent with the Secretary's pre-1987 policy, is no longer so. And to defer to the Secretary's arguments now about what the agency's policy was then, rather than discerning such policy from the pronouncements of the agency at that time, would have the effect of thwarting the Moratorium's central "freezing" purpose altogether.

Winder HMA LLC, 206 F.Supp.3d at 36-37 (internal citations and quotation marks omitted).

Therefore, the conclusions of this Circuit, other members of this Court, and other courts that a remittance advice requirement is a reasonable interpretation of the bad debt regulations or the relevant PRM provisions is not determinative here. This is so because, as the plaintiffs note, "none of [these cases] dealt with the Moratorium and none ... found as a factual matter that the must[-]bill policy was established by th[e] PRM provisions." Pls.' Objs. at 9. And, none of these decisions concluded that the Administrator's interpretation of the bad debt regulations or the PRM provisions to require a remittance advice is the only interpretation of the PRM. See, e.g., Grossmont Hosp., 797 F.3d at 1082, 1085-86 (not analyzing the PRM provisions, but holding that the agency's interpretation of the bad debt regulation to require a provider to "obtain[ ] a determination from the state of its payment responsibility" "[wa]s sensible ... because state policies vary widely and the state will have all of the necessary information under its Medicaid system," and "[t]here [wa]s no indication that the Secretary's interpretation [wa]s contrary to law or to the agency's intent at the time of the adoption"); see also Me. Med. Ctr., 775 F.3d at 479 (concluding that "the [b]illing [r]equirement is a natural interpretation of the[ ] regulations"); Cmty. Hosp. of Monterey Peninsula, 323 F.3d at 793 ("Given that billing the state is the most straightforward and reliable way of determining whether, and, if so, how much the state will pay, we are unable to say that the must-bill policy is inconsistent with the statute or regulations or is an unreasonable interpretation of them"); Cove Assocs. Joint Venture, 848 F.Supp.2d at 25 (concluding that "PRM §§ 310, 312, and 322 are reasonably read to require that the state be billed," which "is consistent with the Medicare statute and regulations[ ] and is not an unreasonable implementation of either"); GCI Health Care Ctrs., Inc., 209 F.Supp.2d at 71 (concluding "that the reasoning contained within the Secretary's interpretation of ... PRM §§ 310, 312[ ] is both valid and sound"). Indeed, at least two of these cases acknowledge that the PRM provisions are ambiguous. See Cmty. Hosp. of Monterey Peninsula, 323 F.3d at 793, 796 (observing that "[i]t may be true[ ] ... that the[ ] regulations can be read as not precluding the possibility of a provider's establishing the [bad debt] criteria ... by alternative means," and that "[a]t most, the[ ] [PRM] provisions are ambiguous"); see also Cove Assocs., 848 F.Supp.2d at 25 ("At most, the[ ] PRM provisions are ambiguous[.]" (citing Cmty. Hosp. of Monterey Peninsula, 323 F.3d at 796 ) ).

For all of these reasons, the Court cannot conclude that the PRM provisions support the Administrator's finding that a remittance advice requirement existed prior to August 1, 1987. As another member of this Court observed, the Administrator "is confusing the [PRM provisions] with his agency's interpretations of [the PRM provisions]." Foothill Hosp., 558 F.Supp.2d at 10. Therefore, the Court must look to other evidence in the record to determine whether the Administrator's finding that a remittance advice requirement existed prior to August 1, 1987 may be upheld.

3. Pre-Moratorium Board Decisions

The Administrator cited two Board decisions issued prior to the Moratorium-Concourse Nursing Home v. Travellers Insurance Co., PRRB Dec. No. 83-D152 (Sept. 27, 1983); and St. Joseph Hospital v. Blue Cross & Blue Shield Association, PRRB Dec. No. 84-D109 (Apr. 16, 1984)-as support for his position that the Secretary's must-bill policy, including the remittance advice requirement, "has been consistently articulated in the final decisions of the Secretary addressing this issue ... and applied to [ ] cost years prior to August 1, 1987." AR 14 & n.16. Like the Administrator, the Magistrate Judge concluded that these decisions constitute "evidence of the Secretary's consistent implementation of the must-bill policy since 1983." R & R at 12. The plaintiffs raise a number of objections to these decisions, including that "CMS administrative decisions do not and cannot set policy for the Secretary," Pls.' Objs. Reply at 9, and that "non-ceiling case [ ] decisions related to the need to bill the State when the State was the responsible payor[,] ... have no bearing on whether there is a must[-]bill policy by which a provider must bill [and receive a remittance advice from] the State when the provider otherwise determines or demonstrates the State is not the responsible payor," id. at 7-8 (internal citation omitted). For the reasons explained below, the Court concludes that neither of these decisions supports the Administrator's finding that, prior to August 1, 1987, the Secretary interpreted his regulations or PRM provisions to require providers to obtain and submit a remittance advice in order to receive Medicare reimbursement. Consequently, the Court need not address each of the plaintiffs' remaining arguments regarding these decisions.

In Concourse Nursing Home, a provider sought Medicare reimbursement for unpaid deductible and coinsurance payments that it contended were "owed by the [state] Medicaid program." AR 1538. The provider represented to the Board that prior to seeking Medicare reimbursement for these amounts, it had made "formal appeals and [had] informal discussions with appropriate state officials," which it argued were "reasonable" efforts given that the state "had repeatedly refused to pay the[ ] claims until recently." Id. (contending that "any further collection efforts would be futile"). The intermediary disagreed and disallowed the claims, concluding that "the provider ha[d] not met the [bad debt] requirements of 42 C.F.R. [§] 405.420(e)" because, inter alia, it "ha[d] not demonstrated that a reasonable collection effort was made before the debts were deemed to be worthless." Id. The Board affirmed the intermediary's decision, providing the following brief analysis:

The Board finds that the provider has furnished no documentation which would support its contentions that it had established collection policies and procedures or that actual collection efforts were made to obtain payments from the patients or the Medicaid authorities before an account balance was considered an uncollectible bad debt for Medicare purposes. The Board also notes that payments have been received for the bad debts claimed by the provider, which would also demonstrate that the amounts claimed were not properly chargeable to the Medicare program.

AR 1544.

In St. Joseph Hospital, decided approximately six months later, the Board again considered a provider's claims for Medicare reimbursement for unpaid deductible and coinsurance payments associated with dual eligible patients. See AR 1549. In that case, the intermediary had also disallowed the provider's claims "based upon its determination that the provider had not made reasonable collection efforts for the[ ] [ ] accounts." AR 1550. Specifically, as to the provider's Medicare reimbursement claims for Medicaid patients, the intermediary had concluded that because "[t]he State of Georgia ... will pay for the deductible and coinsurance amounts applied to a charge for service allowed by Medicare regulations[,] [ ] reasonable collection efforts related to Medicare bad debts should have included action to collect amounts owed by ... [the] State of Georgia," but "[t]he provider ha[d] not demonstrated that such action took place." Id. In affirming the intermediary's disallowance, the Board

conclude[d] that the bad debts claimed did not meet the regulatory requirements of [ 42 C.F.R. §] 405.420(e) because the provider could not support its claims that: they related to covered services and derived from deductibles and coinsurance; reasonable collection efforts were made; all accounts were not collectible; and there was no likelihood of future recovery. While the number of in-house billings was consistent for all parties, the provider did not attempt to bill the State of Georgia for its Medicaid patients. [Therefore, t]he provider's collection efforts were more token than genuine.

AR 1550-51.

These cases do not demonstrate that the Secretary interpreted his regulations or the PRM provisions as requiring a remittance advice as a prerequisite for reimbursement of unpaid deductibles and coinsurance associated with dual eligible patients. Notably, the Secretary himself does not claim that either decision demonstrates such a requirement. See Def.'s Summ. J. Mem. at 16-17 (asserting only that these two cases support a "billing requirement"). Indeed, neither decision refers to a remittance advice or any other documentation of the state's response to a claim, let alone a requirement that providers must obtain from the state and submit such documentation in order to receive Medicare reimbursement. Although the Board in Concourse Nursing Home suggested that a provider must "furnish[ ] [ ] documentation ... [to] support ... that actual collection efforts were made to obtain payments from the patients or the Medicaid authorities," AR 1544, it does not specify what documentation is required or assert that a provider must demonstrate that a state Medicaid program has denied payment in order to receive Medicare reimbursement for deductibles and coinsurance associated with dual eligible patients.

Additionally, even assuming that these cases support a billing requirement (which the Court does not decide for the reasons explained in Part III.B, infra ), these cases would still fall short of supporting a remittance advice requirement. Although receiving a remittance advice or other determination of liability from the state may be a natural consequence of billing the state in many cases, and thus, the two requirements are logically related, as the plaintiffs'

experience in this case demonstrates, a provider may not always receive a remittance advice in response to a bill submitted to the state. See AR 12. In any event, any causal relationship between the billing and remittance advice requirements would not compel the Court to presume the existence of a remittance advice requirement solely from the existence of a billing requirement. As the Administrator and this Circuit have recognized, the two requirements are analytically distinct. See AR 2 ("The issue is whether the [p]roviders were required to bill the State Medicaid program and submit a State remittance advice ... to the Medicare [intermediary] as a precondition for the Medicare program to pay bad debts[.]" (emphasis added) ); see also Grossmont Hosp. Corp., 797 F.3d at 1086 ("The must[-]bill policy encompasses two requirements[:] a requirement to bill the state ... for the bad debt claims as well as a requirement to obtain the state's determination as to its financial responsibili