& (the case returns for further review)CivilCourt of AppealsAppeal
In Home Health, LLC v. Robert Kennedy, Jr.
Court
Court of Appeals for the Sixth Circuit
Decided
Jul 27, 2026
Docket
25-3542
Judges
Chad A. Readler, Stephanie Dawkins Davis, Rachel S. Bloomekatz
đDetailed analysis & 3-line summary
AI breakdown
Analyzed Oct 4, 2026
Where this case stands
District court: the 's decision regarding coverage and .
This decision ¡ Appeal
& (the case returns for further review)
TL;DR
1In Home Health is challenging 's demand for nearly $1 million over denied hospice claims.
2The court ruled that the incorrectly applied the protections to the provider's claims.
3The must reassess whether the provider's interpretations of eligibility were reasonable based on guidelines.
Key issues
1
Did the apply the correct standard for the ?
Holding ¡ The failed to assess if In HomeHealth's interpretations were reasonable as per the guidelines.
2
Was there enough evidence to deny coverage for certain claims?
Holding ¡ The court found the evidence supported some denials but didn't fully justify denying the .
Why it matters
This case affects how hospice providers understand and interpret guidelines, impacting their financial liabilities.
If you were the judge?
Hospice provider fights over $1 million Medicare claim denials. Was the decision fair?
1A Medicare contractor says In Home Health must pay back nearly $1 million for hospice claims they didn't meet standards.
2The ALJ mostly agreed but denied coverage for 104 claims, saying the provider knew Medicare's requirements but failed to follow them.
3In Home argues the ALJ misapplied the safe harbor rule that protects providers acting reasonably from having to pay back denied claims.
Should the have properly applied the in this case?
Parties
Appellant
In Home Health, LLC
Appellee
Robert Kennedy, Jr.
Roles are inferred from the case caption.
Opinion of the court
RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 26a0205p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
â
IN HOME HEALTH, LLC,
â
Plaintiff-Appellant, â
> No. 25-3542
â
v. â
â
ROBERT F. KENNEDY, JR., in his official capacity as â
Secretary of the United States Department of Health & â
Human Services, â
Defendant-Appellee. â
â
Appeal from the United States District Court for the Northern District of Ohio at Toledo.
No. 3:24-cv-00281âJack Zouhary, District Judge.
Argued: April 30, 2026
Decided and Filed: July 27, 2026
Before: READLER, DAVIS, and BLOOMEKATZ, Circuit Judges.
_________________
COUNSEL
ARGUED: Joseph S. Diedrich, HUSCH BLACKWELL LLP, Washington, D.C., for Appellant.
Brendan F. Barker, UNITED STATES ATTORNEYâS OFFICE, Cleveland, Ohio, for Appellee.
ON BRIEF: Joseph S. Diedrich, HUSCH BLACKWELL LLP, Washington, D.C., Shawn J.
Anderson, HUSCH BLACKWELL LLP, Milwaukee, Wisconsin, for Appellant. Brendan F.
Barker, UNITED STATES ATTORNEYâS OFFICE, Cleveland, Ohio, for Appellee. William A.
Dombi, Jason E. Bring, ARNALL GOLDEN GREGORY LLP, Washington, D.C., for Amici
Curiae.
No. 25-3542 In Home Health, LLC v. Kennedy Page 2
_________________
OPINION
_________________
BLOOMEKATZ, Circuit Judge. Every year millions of Americans enter hospice.
Medicare pays for hospice when a beneficiary is âterminally ill,â which means the patient has a
life expectancy of six months or less. But it is hard to predict with certainty when someone will
die. Doctors decide if someone qualifies for hospice in the first instance, examining whether a
patientâs clinical profile satisfies the medical standard governing terminal illness. Down the line,
when a healthcare provider seeks Medicare reimbursement, administrators review the doctorâs
determination. So what happens when an administrator concludes that the doctor was wrong in
their prognosis? The Medicare statute answers with a safe harbor: A provider is not on the hook
so long as the doctorâs application of the standard for assessing terminal illness was reasonable.
This case is primarily about when and how hospice providers qualify for that safe harbor.
When making that assessment in this case, the ALJ concluded that the safe harbor did not
apply because In Home Health knew about the operative Medicare notice on hospice standards.
This was a mistake. Instead, the ALJ should have asked whether the provider adopted a
reasonable interpretation of the operative Medicare notice as applied to relevant claims.
Accordingly, we vacate and remand to the district court with instructions to return the case to the
ALJ to apply the safe harbor under the proper statutory standard in the first instance.
BACKGROUND
I. Hospice Regulatory Scheme
Hospice is a specialized form of medical care that millions of Americans rely on every
year. Rather than trying to cure or slow the progression of terminal disease, hospice focuses on
comfort: managing pain, controlling symptoms, and supporting the patientâs emotional and
spiritual well-being for whatever time they have left to live. Hospice also supports a patientâs
family members and caregivers both during the patientâs illness and through bereavement.
Given the broad service offerings, hospice care teams include not just doctors and nurses, but
also social workers, bereavement counselors, spiritual care providers, and trained volunteers.
No. 25-3542 In Home Health, LLC v. Kennedy Page 3
Natâl Hospice & Palliative Care Org., NHPCO Facts and Figures, 2 (Sep. 10, 2024),
https://perma.cc/JY8V-84V7. Because of these services, hospice âgreatly improve[s] the quality
of care of patients and their families near the end of life.â Amy S. Kelley et al., Hospice
Enrollment Saves Money for Medicare and Improves Quality Across a Number of Different
Lengths-of-Stay, 32 Health Affairs 552, 552 (2013).
Recognizing the advantages of hospice, Congress expanded Medicare to cover it in 1982.
See Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248, § 122, 96 Stat. 324,
356â63. Medicare is a federal health insurance program primarily for Americans ages 65 and
older. 42 U.S.C. § 1395c. Medicare covers hospice services that are âreasonable and necessary
for the palliation or management of terminal illness.â Id. § 1395y(a)(1)(C). An individual is
âterminally illâ if they have a life expectancy of six months or less, assuming their illness runs its
normal course. Id. §§ 1395f(a)(7), 1395x(dd)(3)(A). That said, â[p]redicting life expectancy is
not an exact science,â 75 Fed. Reg. 70372, 70448 (Nov. 17, 2010), so some individuals placed in
hospice may live months, even years longer than six months. Accordingly, Medicare does not
cap the amount of time an individual can spend in hospice. 42 U.S.C. § 1395d(d)(1). Instead, so
long as an individual has a prognosis of six months or less and continues to have that prognosis
even if they live longer than six months, the statutory scheme allows them to remain in hospice.
Still, Medicare has imposed extensive reporting requirements to ensure that hospice
remains a short-term, end-of-life form of healthcare. The law requires hospices to keep detailed
medical records that document a patientâs condition. These requirements begin when an
individual enrolls in hospice. At that point, a hospice physician must certify in writing that,
based on their clinical judgment, the individual is terminally ill. Id. § 1395f(a)(7). That
certification âmust include a brief narrative explanation of the clinical findings that supports a
life expectancy of 6 months or less.â 42 C.F.R. § 418.22(b)(3). Moreover, â[c]linical
information and other documentation that support the medical prognosis must accompany the
certification and must be filed in the medical record.â Id. § 418.22(b)(2). The initial
certification covers a 90-day period, then the hospice physician must recertify that the patientâs
terminal condition continues to engender a life expectancy of six months or less. 42 U.S.C.
§ 1395f(a)(7)(A)(i), (ii); 42 C.F.R. § 418.22(a)(1). The second certification likewise lasts for
No. 25-3542 In Home Health, LLC v. Kennedy Page 4
90 days. 42 U.S.C. § 1395f(a)(7)(A)(ii); 42 C.F.R. § 418.21(a)(2). Then, after the second
certification period ends, the hospice physician must recertify every 60 days, provided the
patientâs condition continues to support a six-month prognosis. 42 C.F.R. §§ 418.21(a)(3),
418.22(a)(1).
These documentation requirements supply the evidentiary foundation for the
administrative process through which Medicare paysâand when necessary, recoupsâhospice
reimbursements. Medicare is administered by the Centers for Medicare and Medicaid Services
(CMS), part of the Department of Health and Human Services. CMS contracts with private
insurance companies, who together with local peer review organizations (collectively
âcontractorsâ) review, approve, and pay Medicare claims that healthcare providers submit.
42 U.S.C. § 1395h(a). Medicare coverage turns on whether a particular item or service is
âreasonable and necessary.â Id. § 1395y(a)(1)(C). When making these determinations,
contractors rely on Local Coverage Determinations (LCDs), which provide notice of how the
contractor will determine whether an item or service satisfies the âreasonable and necessaryâ
standard. Id. § 1395ff(f)(2). LCD 33393, the LCD relevant here, sets forth clinical diagnoses,
statuses, signs, symptoms, and characteristics that demonstrate a patient is terminally ill. CMS,
Hospice â Determining Terminal Status LCD 33393, https://perma.cc/NJ4W-BSYM. If a
contractor concludes that a patient is terminally ill, as defined by the LCD, Medicare pays the
hospice a predetermined fee for each day of care it provided. 42 U.S.C. § 1395ddd.
Even after reimbursement, contractors can initiate a post-payment review that evaluates
whether the item or service satisfies the reasonable and necessary standard. See id. §§ 1395ddd,
1395g(a), 1395y(a)(1)(C). If, upon second review, the Medicare contractor concludes the
services were not reasonable and necessary, meaning that Medicare paid a provider when it
should not have, then the contractor can seek to recoup that payment. Id. § 1395ddd(f).
When Medicare seeks to recoup payment, itâs not surprising that providers may disagree
with the contractorâs determination. But they are not without recourse. There is a four-part
administrative appeal process that providers can undertake to challenge an unfavorable outcome
of a post-payment review. The process consists of: (1) requesting a redetermination of the
decision by the Medicare contractor that sought to recoup the overpayment; (2) requesting a
No. 25-3542 In Home Health, LLC v. Kennedy Page 5
reconsideration of the Medicare contractorâs redetermination by a different contractor (known as
a âQualified Independent Contractorâ); (3) requesting a de novo hearing before an administrative
law judge (ALJ); and (4) appealing any adverse ALJ decision to the Medicare Appeals Council
of the Health and Human Services Departmental Appeals Board. 42 C.F.R. § 405.904(a)(2), (b).
If the Council either affirms the coverage denial or does not render a decision within a 90-day
timeframe, a provider can appeal the overpayment determination in federal district court.
42 U.S.C. § 1395ff(b)(1)(A); 42 C.F.R. § 405.1132.
Even if a provider does not successfully prove that the item or service satisfied
Medicareâs statutory standard during these proceedings, it is not necessarily financially liable.
The Medicare statute contains a safe harbor. See Banks v. Secây, Depât of Health & Hum. Servs.,
38 F.4th 86, 91 (11th Cir. 2022). Under 42 U.S.C. § 1395pp, a provider need not reimburse an
overpayment if it âdid not know, and could not reasonably have been expected to know, that
payment would not be madeâ for the services at issue. 42 U.S.C. § 1395pp(a)(2). âA sort of
good faith affirmative defense,â this provision reflects Congressâs ârecognition of the complexity
of the Medicare maze.â Caring Hearts Pers. Home Servs., Inc. v. Burwell, 824 F.3d 968, 970
(10th Cir. 2016) (Gorsuch, J.). It safeguards providers that deliver healthcare services that they
reasonably believed Medicare would cover.
II. Procedural History of In Home Healthâs Claims
In Home Health is a Medicare-certified provider of hospice services. In 2020, a
Medicare contractor informed In Home that it did not meet Medicare coverage requirements for
252 of 374 claims reviewed for nine of In Homeâs patients, amounting to almost $1 million in
overpayments to In Home that it would need to pay back.
In Home appealed the contractorâs determination. First, it sought redetermination by the
contractor. Then, after receiving an unfavorable redetermination decision, In Home sought
reconsideration before a Qualified Independent Contractor. The Qualified Independent
Contractor reviewed the underlying medical records and then, applying LCD 33393, reversed the
prior contractorâs coverage determinations for 79 of the disputed claims while upholding the
denial of coverage for the remaining 173 claims.
No. 25-3542 In Home Health, LLC v. Kennedy Page 6
In Home then sought review by an ALJ of 155 of those 173 denied claims that related to
five different patients. Dr. Thomas DeGregory, the Medical Director of In Home, testified
during a hearing before the ALJ. Although he treated only one of the five patients, Dr.
DeGregory maintained that they were all terminally ill as defined by LCD 33393 and so
Medicare should have covered their hospice services.
The ALJ issued a decision that was partially favorable to In Home. Applying LCD
33393, the ALJ determined that Medicare covered 52 claims that the previous contractors had
deemed uncovered. But he also upheld the previous denials of 104 claims for four patients. 1
The ALJ further concluded that for those 104 claims, In Home could not benefit from the safe
harbor contained in 42 U.S.C. § 1395pp because In Home should have had âknowledge of the
billing and practice information contained in the appropriate CMS notices . . . as well as the
standards for sufficient documentation of services.â AR Vol. 1 at 73. Thus, the ALJ concluded
that In Home was financially liable for the 104 denied claims.
In Home sought review of the ALJâs decision regarding the 104 denied claims by the
Medicare Appeals Council. Because the Council did not issue a decision within 90 days, In
Home sought review in federal district court. The district court affirmed the ALJâs decision as to
both the scope of Medicare coverage and the safe harbor.
Overall, out of the 2522 claims for which the contractor originally sought recoupment, In
Home prevailed in reversing 131 claims (79 before the Qualified Independent Contractor,
52 before the ALJ) and continues to dispute the denial of 104 claims. Pressing its challenge to
those denials, In Home timely appealed.
ANALYSIS
This case presents two issues. First, whether substantial evidence supported the ALJâs
conclusion that Medicare did not cover certain services that In Home provided to patients. We
1Although In Home appealed 155 claims to the ALJ, the total number of claims it discussed (52 claims
reversed, 104 affirmed) amounts to 156 since the ALJ split one claim by partially affirming and partially reversing
the Qualified Independent Contractor.
2In Home did not appeal the Qualified Independent Contractorâs determination with respect to all
173 claims it denied.
No. 25-3542 In Home Health, LLC v. Kennedy Page 7
agree with the government that substantial evidence supported the ALJâs decision given its
thorough, reasoned assessment of the record. Second, whether the ALJ properly applied the
Medicare statuteâs safe harbor when he determined that In Home is financially liable for the
disputed services. Here, we conclude that the ALJ failed to apply the correct standard because
the decision did not consider whether a provider could reasonably have determined that the
denied claims satisfied LCD 33393.
I. Coverage Determination
We begin our analysis by explaining the standard that the ALJ applied, LCD 33393, to
determine whether the patients at issue were âterminally illâ and therefore entitled to Medicare
coverage for hospice. Then we evaluate whether substantial evidence supports the ALJâs
decision that the patients did not meet that standard.
We review de novo the district courtâs conclusion that substantial evidence supported the
ALJâs coverage determination. Jordan v. Commâr of Soc. Sec., 548 F.3d 417, 422 (6th Cir.
2008). Where, as here, the Medicare Appeals Council did not review the ALJâs decision, we
treat the ALJâs decision as final. Calvin v. Chater, 73 F.3d 87, 90 (6th Cir. 1996). And we must
affirm that underlying decision unless we determine that substantial evidence did not support it.
Waters v. Becerra, 80 F.4th 782, 787 (6th Cir. 2023); 42 U.S.C. §§ 405(g), 1395ff(b)(1)(A).
Substantial evidence âfalls somewhere between more than a scintilla but less than a
preponderance.â Waters, 80 F.4th at 787 (citing Cohen v. Secây of Depât of Health & Hum.
Servs., 964 F.2d 524, 528 (6th Cir. 1992)). It âdoes not mean a large or considerable amount of
evidence, but rather âsuch relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.ââ Pierce v. Underwood, 487 U.S. 552, 565 (1988) (quoting Consol.
Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Reviewing for substantial evidence precludes
us from reweighing conflicting evidence, making credibility determinations, or substituting our
judgment for the ALJâs reasoned determination. Jordan, 548 F.3d at 422.
A. Regulatory Standard
To determine whether Medicare covered the claims at issue, the ALJ relied on LCD
33393, which sets forth clinical diagnoses, statuses, signs, symptoms, and characteristics that
No. 25-3542 In Home Health, LLC v. Kennedy Page 8
support a terminal prognosis. The LCD contains three parts: Part I lists signs and symptoms of
decline; Part II lists â[n]on-disease specific baseline guidelines,â such as whether a patient
depends on assistance for two or more activities of daily living; and Part III lists disease-specific
considerations that an ALJ should take into account when determining whether a patient is
eligible for hospice services. CMS, LCD 33393. A patient can qualify for hospice by either
satisfying Part I of the LCD or by satisfying Parts II and III.
In Home argues that the remaining claims qualify under Part I of LCD 33393, so
we focus on that pathway for demonstrating terminal illness. Once a patient has entered
hospiceâmeaning a doctor has certified they have a life expectancy of six months or lessâPart
I of LCD 33393 says that a measurable decline in their clinical status supports a continued
terminal prognosis. Part I instructs physicians to assess, among other things, whether the patient
exhibits weight loss (at least 10% of total body weight in six months), worsening infections such
as pneumonia or sepsis, increasing dependence on help with basic daily tasks, worsening lab
results or vital signs, or more frequent ER visits. Doctors use various scales such as the
Karnofsky Performance Status (KPS), Palliative Performance Score (PPS), and Functional
Assessment Staging Tool (FAST) to measure changes in these metrics. While Part I of the LCD
states that these scales and other daily living indicators inform whether a patient is âterminally
ill,â it does not specify how much these metrics must change, or over what period, for that
change to signify terminal illness.
B. Application
We now turn to whether substantial evidence supports the ALJâs decision that these
various claims did not satisfy LCD 33393. We conclude that it does. After setting out the
applicable law, the ALJ examined the relevant data from the administrative record and provided
an explanation of his decision that included a rational connection between the record facts and
the coverage determination. For each patient and claims period at issue, the ALJ worked through
face-to-face encounter notes, recertification evaluations, nursing visit notes, and interdisciplinary
team care plans. The ALJ tracked individual clinical datapoints across time to assess whether
they showed a pattern of decline. Where the record contained conflicting data (for instance,
No. 25-3542 In Home Health, LLC v. Kennedy Page 9
where a certification evaluation and a nursing note reported vastly different weights for similar
dates), the ALJ acknowledged the discrepancy and reached a reasoned conclusion.
An example from the record illustrates the ALJâs reasoned analysis. Beneficiary 1 was
admitted to hospice in September 2015 with a terminal diagnosis of senile brain degeneration
with related dementia and Alzheimerâs disease. The ALJ found that her FAST score fluctuated,
and that her KPS score, while declining at first, remained stable at 30%. Notwithstanding that
decline, the ALJ concluded that Beneficiary 1 did not satisfy LCD 33393âs requirements because
her weight loss, while present, did not approach the 10% threshold set out in LCD 33393.
It might be reasonable to apply LCD 33393 to these facts and come to a different
conclusion, as we discuss in greater detail in the next section. Nonetheless, substantial evidence
supports the ALJâs coverage determinations because âa reasonable mind might accept as
adequateâ the ALJâs application of LCD 33393 to the underlying medical record. Pierce,
487 U.S. at 565 (quoting Consol. Edison Co., 305 U.S. at 229).
In Home responds with two primary arguments, but we do not find either persuasive.
First, In Home contends that the ALJ improperly treated LCD 33393 as the controlling legal
standard and that even if the beneficiaries were not eligible for hospice under LCD 33393, they
still could have been âterminally illâ and thus eligible for the hospice benefit.
In Home is correct that LCDs do not âestablish or change a substantive legal standard.â
Agendia, Inc. v. Becerra, 4 F.4th 896, 900 (9th Cir. 2021) (citation modified) (quoting 42 U.S.C.
§ 1395hh(a)(2)). Indeed, the substantive legal standard âwould remain unalteredâ even if LCDs
âceased to exist.â Id. Thus, LCD 33393 is just âone path to eligibilityâ for hospice coverage if a
hospice can âotherwise demonstrate . . . that the patient has a terminal prognosis.â United States
v. Vista Hospice Care, Inc., No. 07-cv-604-M, 2016 WL 3449833, at *4 (N.D. Tex. June 20,
2016) (citation modified); see also 42 U.S.C. § 1395x(dd)(3)(A). It is true that Medicare
regulations require the ALJ to give âsubstantial deferenceâ to the LCD when analyzing medical
records, but it need not be determinative. 42 C.F.R. § 405.1062(a). And In Home has not
explained what alternative standard for assessing a patientâs terminality the ALJ should have
used. Nor did it propose a different method for assessing terminality to the ALJ. Rather, even
No. 25-3542 In Home Health, LLC v. Kennedy Page 10
Dr. DeGregory, In Homeâs own employee and expert, based his testimony before the ALJ on
whether the disputed patients were terminally ill as defined by LCD 33393. Thus, the ALJ did
not improperly rely on LCD 33393.
Second, In Home claims that substantial evidence does not support the ALJâs
determination because the ALJ ignored significant evidence that ran contrary to his opinion,
including the physician certifications and Dr. DeGregoryâs testimony. Consequently, In Home
says, the ALJ âplayed doctorâ by making his own independent medical findings that contradicted
the medical professionalsâ assessments. Appellant Br. at 45.
We disagree. The ALJ analyzed whether the objective medical evidence was consistent
with a prognosis of six months or less under the benchmarks set forth in LCD 33393. And
substantial evidence could support the ALJâs decision even though Dr. DeGregory and a
certifying physician said otherwise. As a preliminary matter, the ALJ did not ignore Dr.
DeGregoryâs testimony. Indeed, the ALJ relied on Dr. Gregoryâs testimony to reverse the
contractorâs denial and conclude that Beneficiary 3 was terminally ill. But the ALJ does not
serve as a mere rubber stamp for medical testimony. The relevant regulations require objective
medical evidence to corroborate the physicianâs certification, see 42 C.F.R. § 418.22(b)(2), and a
âsigned certification, absent a medically sound basis that supports the clinical judgment, is not
sufficient for application of the hospice benefit under Medicare.â 70 Fed. Reg. 70532, 70534â35
(Nov. 22, 2005). Here, the ALJ independently reviewed the objective medical evidence and
concluded it did not support the physician certifications or Dr. DeGregoryâs assessment for some
claims. True, that mirrors, in some respect, how In Homeâs providers assessed the patientsâ
terminality. But that exercise was also necessary to the ALJâs review of those underlying
assessments. And since those medical professionals did not have âunchecked authority to certify
patients as hospice eligible,â United States v. Care Alternatives, 81 F.4th 361, 371 (3d Cir.
2023), the ALJ did not err by departing from their opinions.
Therefore, we agree with the district court that substantial evidence supported the ALJâs
determination that Medicare did not cover the disputed claims.
No. 25-3542 In Home Health, LLC v. Kennedy Page 11
II. Safe Harbor
We next review de novo whether the ALJ properly applied the safe harbor. See Cardew
v. Commâr of Soc. Sec., 896 F.3d 742, 746 (6th Cir. 2018). Even though substantial evidence
supported the ALJâs denial of coverage for some of In Homeâs claims, In Home is not
necessarily required to reimburse Medicare for those services. Rather, In Homeâs financial
liability turns on whether it qualifies for the Medicare statuteâs safe harbor. Because we have not
previously addressed the safe harborâs governing legal standard, we explain that standard here,
especially as it relates to hospice services. The ALJ did not have the benefit of this explanation.
Accordingly, we vacate and remand to the district court with instructions to return the case to the
agency for the ALJ to apply the safe harbor under this standard in the first instance.
A. Legal Standard
The Medicare statuteâs safe harbor requires Medicare, in certain circumstances, to pay for
items or services it does not technically cover. Congress, of course, does not want hospices or
other medical providers to abuse the system by furnishing unnecessary care. âMedicare fraud
has long plagued the American healthcare system.â United States v. Daneshvar, 925 F.3d 766,
792 (6th Cir. 2019). But not all denied claims result from bad faith or fraud. Sometimes it may
not be clear whether Medicare covers a specific service, and a provider acting in good faith may
reasonably, yet wrongly, conclude that Medicare will cover a patientâs care. To avoid
discouraging legitimate care, Medicare will reimburse a provider, even after an unfavorable
coverage determination, if it âdid not know, and could not reasonably have been expected to
knowâ that the disputed items or services were ânot reasonable and necessary for the diagnosis
or treatment of illness or injury.â 42 U.S.C. §§ 1395pp(a)(2), 1395y(a)(1)(A). This safe harbor
operates as a cost-shifting mechanism, limiting a providerâs liability when it acted reasonably
and in good faith. See Caring Hearts, 824 F.3d at 970. And Congress explicitly applied this safe
harbor to hospice care, limiting liability when a hospice provider âcould not reasonably have
been expected to knowâ that an âindividual is not terminally ill.â 42 U.S.C. § 1395pp(a)(2), (g).
The question here is how to determine when a provider meets that standardâthat it
neither knew, nor could reasonably have known that Medicare did not cover an item or service.
No. 25-3542 In Home Health, LLC v. Kennedy Page 12
Beyond the statutory language, Medicare regulations provide some instruction. A provider âis
considered to have knownâ that Medicare did not cover the disputed services if â[i]t is clearâ that
âservices were excluded from coverageâ based on (1) Medicare notices, including written guides
or directives from private contractors, about those services; (2) Federal Register notices
addressing the issue; or (3) the serviceâs inconsistency with the local medical communityâs
âacceptable standards of practice.â 42 C.F.R. § 411.406(e). Under the regulation, then, the ALJ
must assess the relevant notices and ask whether, given the facts of a particular claim, the
provider was on clear notice that Medicare would not cover the claim. If so, the provider does
not fall within the safe harbor.
This regulation helps explain the safe harbor, but it does not fully delineate its scope.
The statute states that the safe harbor applies only if the provider did not know and âcould not
reasonably have been expected to knowâ that Medicare would not cover a claim. 42 U.S.C.
§ 1395pp(a)(2). The regulation identifies one circumstance that falls within that standardâwhen
a provider is on clear notice that Medicare coverage does not extend to a claim. If there is clear
notice, the provider cannot âreasonablyâ contend that the denial was unexpected. For instance, a
provider cannot reasonably claim it was unaware that Medicare would not reimburse it for using
a particular medical device to treat osteoarthritis when published Medicare decisions and
guidance stated that Medicare would not cover the device for that use. See Almy v. Sebelius,
679 F.3d 297, 300 (4th Cir. 2012).
But the statuteâwhich we must followâturns on reasonableness, not on clear notice
alone. Thus, even in the absence of âclear notice,â the safe harbor still requires a provider to
have reasonably interpreted the relevant notice or local standard of practice as it applies to its
claims. An LCDâs language, for instance, may make it unreasonable for a provider to think that
Medicare will cover the claimed services for a particular patient, even if the LCD does not
address that type of patient directly or âclear[ly].â 42 C.F.R. § 411.406(e). For instance, every
patient who loses 10% of their bodyweight is not eligible for hospice even though that is one
marker of âterminal illnessâ under LCD 33393âindeed, they might just be on a GLP-1. CMS,
LCD 33393. It would be unreasonable for a provider to conclude under LCD 33393 that such a
No. 25-3542 In Home Health, LLC v. Kennedy Page 13
patient is terminally ill and bill Medicare for hospice just because the notice does not address that
circumstance explicitly.
Accordingly, in applying the safe harbor, an ALJ must consider whether a provider could
reasonably have interpreted the relevant notices or local standards of practice as covering each
denied claim. If the provider is on clear notice that Medicare would not cover the claim, it does
not fall within the safe harbor. And even absent clear notice, a provider does not fall within the
safe harbor if their interpretation of a relevant notice or local standard of practice is
unreasonable. But if a provider reasonablyâalbeit incorrectlyâinterpreted the Medicare notices
and standards as covering a patientâs claim, then the safe harbor saves them from liability.
B. The ALJâs Decision
Until this opinion, we had not explained the scope of the safe harbor, and so the ALJ did
not employ this standard when evaluating In Homeâs claims. Instead, the ALJ reasoned that âas
a provider of services,â In Home â[wa]s expected to have knowledge of the billing and practice
information contained in the appropriate CMS notices, including manual issuances, bulletins, or
other written guides or other directives from Medicare contractors, which would include . . . the
standards for sufficient documentation of services.â AR Vol. 1 at 157. He further stated that In
Home should have also âha[d] knowledge or experience of acceptable standards of practice,
including billing practices, by the local medical community.â Id. This approach, however, reads
the safe harbor right out of the statute. By the ALJâs reasoning, all providers are imputed with
knowledge of the relevant notices and standards, and that knowledge alone is sufficient to say
they should have known Medicare excluded their claims. So no provider could ever qualify for
the safe harbor irrespective of how vague or ambiguous the Medicare notice and standards are as
applied to their claims nor how reasonable the providersâ view that Medicare would cover them.
The ALJâs analysis is particularly problematic in this context because it treats In Homeâs
awareness of LCD 33393 as a bright-line rule with only one reasonable interpretation for these
patients. All parties agree that LCD 33393 is the only relevant notice for these claims. And, in
essence, the ALJ treated the LCD as âclearâ notice that Medicare would deny these claims.
42 C.F.R. § 411.406(e). But LCD 33393 is a multi-factor, fact intensive standard. As a result,
No. 25-3542 In Home Health, LLC v. Kennedy Page 14
and as this proceedingâs history illustrates, LCD 33393 allows for multiple reasonable
applications in some instances. Put differently, a provider might know that LCD 33393 exists,
apply it in good faith, yet reasonably disagree with another provider as to how it maps on to a
particular patient. The ALJ, therefore, should have instead asked whether In Home adopted a
reasonable interpretation of the LCD as applied to these four patientsâ denied claims.
To understand how there may be multiple reasonable interpretations of how LCD 33393
applies to a given patient, consider Part I, which, as mentioned above, requires a âdeclineâ in
certain health-related benchmarks. A hospice provider could reasonably interpret that language
to mean that if a patient stabilizes at a certain point, they are no longer eligible for hospice
services. The LCD seems to confirm as much when it notes that doctors should consider
discharging a patient if they âimprove[] and/or stabilize[] sufficiently over time while in
hospice.â CMS, LCD 33393. But the LCD contains very little guidance of what indicators
would suggest that a patient has improved or stabilized âsufficientlyâ to warrant discharge from
hospice. Id. More confusing still is that the same paragraph goes on to note that patients who
stabilize or improve while in hospice remain eligible for those services so long as providers
âhave a reasonable expectation of continued decline for a life expectancy of less than six
months.â Id. Here again, there is no specific metric that tells a doctor how to determine whether
a patient has satisfied that standard. It is no surprise that the LCD does not contain precise
metrics; as explained, âpredicting life expectancy is not an exact science.â 75 Fed. Reg. at 70488.
But that flexibility means that the ALJ should have considered whether In Home reasonably
interpreted LCD 33393 as covering the disputed claims.
There are also examples from the ALJâs opinion that highlight how there could be
multiple reasonable ways to apply LCD 33393 to a given patient. Consider the LCDâs guidance
stating that a decline in ability to conduct daily activities, as measured by KPS or PPS scores,
due to a progression of disease is evidence supporting a terminal prognosis. It does not specify
when that decline must occur relative to the certification period at issueâwhether it requires
active, ongoing deterioration, or whether a prior decline that has left the patient stabilized at a
lower functional level qualifies. The ALJ relied on a 10% decline in KPS score to justify
reversing the Qualified Independent Contractor and approving coverage for Beneficiary 3.
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But Beneficiary 1 exhibited the same decline in KPS, and the ALJ did not even contemplate that
In Home could have reasonably, in good faith, believed that Beneficiary 1 had a terminal
prognosis. Perhaps, for reasons not apparent to us, despite having the same decline in KPS as
Beneficiary 3, it was nonetheless unreasonable for In Home to believe Beneficiary 1âs hospice
care would be covered for the disputed period. But it is that type of analysis that the ALJ must
undertake.
Consider too that the ALJ reversed the Qualified Independent Contractor and approved
coverage for Beneficiary 3 for another disputed period. The ALJ reasoned that even though
Beneficiary 3âs weight had fluctuated, other clinical indicatorsârequiring assistance with all
daily tasks of living, a recurring infection, sleeping up to 22 hours a day, inability to follow
simple commands, trace edema, and nonsensical speechâjustified approving coverage given the
benchmarks set forth in Part I of LCD 33393. But the ALJ took a different approach with
Beneficiary 2. Even though Beneficiary 2 lost a higher percentage of her bodyweight (albeit,
before the service period at issue) than Beneficiary 3, the ALJ rejected In Homeâs claims related
to Beneficiary 2 after concluding that she was stable and so did not exhibit the symptoms of
decline required by Part I of LCD 33393. But Beneficiary 2 exhibited many of the same traits as
Beneficiary 3ârequiring help with all daily tasks of living, sleeping 18â20 hours a day, and
nonsensical speech. We wonder why, given these factors which were arguably dispositive in the
ALJâs analysis of Beneficiary 3, it was not reasonable for In Home to have determined
Beneficiary 2 was also terminally ill, as defined by LCD 33393.
Given the LCDâs indeterminacy, the ALJ should not have just asked whether In Home
knew the LCD existed. Rather, the proper inquiry was whether in good faith, In Home could
reasonably have believed that the patients were terminally ill as defined by LCD 33393. The
government does not point us to anything in any of the patientsâ records that should have alerted
In Home, contemporaneously, that it was unreasonable for it to determine that the patients were
terminally ill as defined by the LCD. And if such evidence exists, the ALJ did not cite it as a
basis for his conclusion. See Waters, 80 F.4th at 787 (citing SEC v. Chenery Corp., 332 U.S.
194, 196 (1947)). So we remand to allow the ALJ to conduct the reasonableness inquiry in the
first instance.
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CONCLUSION
We vacate and remand to the district court with instructions to return the case to the ALJ
to apply the safe harbor to each of the disputed coverage periods using the legal standard set out
in this opinion.