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S 5062

FAIR DME Appeals Act

119th Congress Introduced by Bill Cassidy

The bill requires Medicare contractors to pay reasonable attorney fees and litigation costs for DME suppliers that prevail on a favorable final appeal when initial determinations w

Introduced in Senate
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Bill Summary · S 5062

Summary of Bill S.5062 (119th Congress) – FAIR DME Appeals Act

Purpose and intent

  • The bill, titled the Fee Awards for Incorrect Reviews DME Appeals Act (FAIR DME Appeals Act), seeks to ensure that durable medical equipment (DME) suppliers who are wrongly denied payment receive the legal fees and litigation costs incurred during the appeals process.
  • It would require certain Medicare contractors to pay these fees, shifting some financial risk for incorrect determinations away from suppliers and onto the contractors responsible for the initial and ongoing review of DME claims.

Key provisions and changes

  1. New entitlement to legal fees and costs (Section 1869(j))

    • Creates a new subsection (j) in Section 1869 of the Social Security Act.
    • Eligible entities: DME suppliers that are small businesses at the time of the initial determination and whose favorable final appeal was heard by the Office of Medicare Hearings and Appeals (OMHA).
    • Trigger: The initial determination related to DME claims was heard by OMHA and ultimately found to be clearly erroneous, not supported by substantial evidence, or failed to follow applicable law/regulation/instruction.
    • What is awarded: Reasonable attorney fees and litigation costs incurred during the appeal process, from each stage up to and including the hearing, even if the eventual final decision remains unfavorable at some intermediate stage.
    • Fee payment responsibility: The covered contractors must pay these fees and costs, regardless of whether they are named in the appeal.

  2. Fee split when a contractor’s decision is affirmed (Section 1869(j)(1)(B))

    • If a contractor affirming an initial determination results in a favorable final appeal, the responsible covered contractor and the contractor who made the initial determination split the attorney fees and costs evenly.

  3. Application and timelines (Section 1869(j)(1)(C)-(E))

    • The supplier must submit an application for fees and costs within 30 days after the date of the favorable final appeal, including documentation of fees and costs, to the administrative law judge (ALJ) who heard the appeal.
    • The covered contractor(s) must respond within 30 days of service of the application.
    • The ALJ must issue a determination on the amount of reasonable attorney fees and costs within 60 days after the end of the response period.
    • The ALJ’s decision on fees is non-appealable.
    • Definitions for terms such as “favorable,” “final appeal,” “litation costs,” and “reasonable attorney fees” are provided to guide determinations.

  4. Limitations and claw-back (Section 1869(j)(2)-(3))

    • Not all elements are eligible for payment. The subsection excludes certain scenarios, such as:
      • If the supplier failed to provide required documentation or did not comply with billing/submission requirements.
      • If a covered contractor applied laws or guidance that changed by the time of the favorable final appeal or relied on a local coverage determination in effect at the time of the initial determination.
    • If a court later finds that the favorable final appeal was obtained through fraud, misrepresentation, or bad-faith conduct, the supplier must return the awarded fees/costs to the involved contractors.

  5. Definitions of relevant terms (Section 1869(j)(4))

    • Covered contractor: includes eligible entities with contracts under section 1893, qualified independent contractors, and Medicare administrative contractors.
    • Favorable: a decision that is favorable to the supplier on every issue related to coverage and payment rules or eligibility/entitlement/premium rules.
    • Final appeal: the last stage of the claims process where the only remaining review is an optional Medicare Appeals Council review or where an ALJ issues a binding determination.
    • Litigation costs: out-of-pocket expenses traditionally taxable or recoverable by a prevailing party.
    • Reasonable attorney fees: compensation for attorney/paralegal time necessary for litigation.
    • Small business status, as used for eligibility, follows the Small Business Act definition.

  6. Agency rulemaking and effective date (Sections 1869(j)(5)-(6))

    • The Secretary must promulgate implementing regulations within 2 years after enactment.
    • The amendments apply to contracts entered into on or after the first January 1 following the year the implementing regulations are issued.

Affected parties

  • DME suppliers (especially small businesses): Potential recipients of fee and cost reimbursements if they prevail on a favorable final appeal.
  • Covered contractors: Medicare Administrative Contractors (MACs), Unified Program Integrity Contractors (UPICs), and Qualified Independent Contractors (QICs) that administer the claims and determinations.
  • Administrative and legal processes: DME appeals handled by OMHA and related ALJ proceedings become subject to fee awards under new subsection.

Procedural and timeline aspects

  • Implementation requires new regulations within 2 years of enactment.
  • The effective date of the amendments is contracts entered into after the Secretary issues implementing regulations (starting January 1 of the year following that implementation).
  • Post-award, a defined, relatively fast-fee determination process: 30-day application window, 30-day contractor response, and a 60-day ALJ determination, with no further appeal of the fee decision.

Practical impact

  • Shifts some financial risk from DME suppliers to the contracting entities when a favorable final appeal demonstrates initial payment denial was clearly erroneous.
  • Could incentivize more thorough and accurate determinations by Medicare contractors, knowing that fees and costs may be payable if errors are found.
  • Requires contractors to pay, and potentially share if applicable, the legal and litigation costs of suppliers pursuingDME-related appeals.

Compiled from official sources — confirm details with the bill’s official record.

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