The Legal Status of LCDs: Unbinding and Non-Regulatory
LCDs are policy decisions made by Medicare Administrative Contractors (MACs) that dictate whether a particular item or service will be covered within a given jurisdiction. These determinations, however, are not rules or regulations; they do not go through the notice-and-comment process required under the Administrative Procedure Act (APA). As Allina established, CMS cannot enforce guidance that has not been properly promulgated.
Unlike National Coverage Determinations (NCDs), which at least carry the imprimatur of CMS, LCDs are merely contractor-issued directives. Even NCDs, though binding for payment purposes, do not establish a “standard of care.” The government’s insistence on using LCDs as evidence of fraudulent intent in FCA cases is an unethical stretch that conflates noncompliance with fraud.
How LCDs Are Misused in Litigation
Despite their lack of legal weight, LCDs are regularly invoked by the Department of Justice (DOJ), CMS, OIG, UPICs, and MACs as evidence of misrepresentation in FCA cases. The theory is that because providers sign certifications agreeing to abide by “rules and regulations,” an LCD violation equates to a knowingly false claim. But this is a logical fallacy: LCDs are not rules or regulations.
In United States v. Betro, we argued before the appellate courts that LCDs should not carry the weight of law in determining fraud liability. While juries can often be convinced of their flaws, appellate judges remain hesitant to acknowledge the distinction. This is why briefing in limine and cross-examination of LCD proponents are critical trial strategies.
Recommendations for Providers and Defense Counsel
- Document LCD Non-Compliance – Providers should proactively document when they deviate from an LCD and the medical necessity justification behind their decision. If a service is medically necessary but falls outside LCD criteria, the provider should explicitly state the rationale in patient records.
- Notify Payors When Deviating – Providers should notify Medicare contractors when an LCD is not being followed in a given case. If an LCD deviation is documented and disclosed, it undermines any later claim that the provider intended to defraud Medicare.
- Brief LCDs in Limine – Defense attorneys should file pretrial motions to exclude LCDs as evidence of fraudulent intent, citing Allina. Prosecutors should not be permitted to use LCDs to define what is “reasonable and necessary” under the FCA.
- Cross-Examine LCD Proponents – Any government witness attempting to assert that an LCD establishes a binding legal standard should be cross-examined aggressively. The jury must understand that LCDs are not law and cannot dictate medical necessity determinations.
The Bondi Administration’s Expected Impact
The incoming Bondi administration is expected to reinforce Allina and restore judicial recognition of the limits of government guidance. AG Bondi has signaled an intent to challenge prosecutorial overreach, ensuring courts do not allow LCDs to be misused as evidence of fraudulent intent. With this shift, appellate traction on the LCD issue may finally gain momentum, preventing prosecutors from improperly leveraging LCD noncompliance as a proxy for fraud.
Frequently Asked Questions (FAQs) about Local Coverage Determinations (LCDs)
1. What is a Local Coverage Determination (LCD)?
- An LCD is a decision by a Medicare Administrative Contractor (MAC) on whether a particular item or service is covered within their jurisdiction, based on whether it is reasonable and necessary under Medicare guidelines.
2. How does an LCD differ from a National Coverage Determination (NCD)?
- While an NCD is a nationwide policy set by the Centers for Medicare & Medicaid Services (CMS) determining coverage for all Medicare beneficiaries, an LCD is specific to a region and established by the local MAC.
3. Are healthcare providers obligated to follow LCDs?
- LCDs are not laws or regulations but serve as guidelines for coverage decisions. Providers are not legally bound to follow them but should be aware that deviating from an LCD may affect Medicare reimbursement.
4. Can providers request changes to an existing LCD?
- Yes, providers or any interested party can request a reconsideration of an LCD by submitting a written request to the respective MAC, including justification supported by new evidence.
5. What should a provider do if they believe an LCD is outdated or incorrect?
- Providers can submit a formal request for reconsideration to the MAC, providing evidence and rationale for why the LCD should be revised.
6. How can I stay informed about changes to LCDs?
- Subscribing to electronic mailing services, such as eNews from your MAC, can provide regular updates on LCDs and other Medicare-related news.
7. Do LCDs determine the standard of care?
- No, LCDs are payment policies and do not establish the standard of care, which is determined by the medical community and may vary based on individual patient needs.
8. What is the process for developing a new LCD?
- The process involves a written request, evidence review, public comment period, and open meetings before finalization. Detailed guidelines are outlined in the Medicare Program Integrity Manual.
9. Can an LCD be challenged legally?
- Yes, an “aggrieved party,” typically a Medicare beneficiary denied coverage due to an LCD, can challenge the determination through an appeals process as outlined in 42 CFR part 426.
10. Are LCDs applicable to Medicare Advantage (MA) plans?
- MA organizations must follow NCDs and applicable LCDs. If an LCD is not applicable to the service area, the MA plan may develop internal coverage criteria based on current evidence.
Conclusion
The misuse of LCDs in FCA cases remains a pressing concern for healthcare providers and defense counsel. However, with proper documentation, disclosure, and strategic litigation tactics, the impact of LCDs can be neutralized at trial and soon, at the appellate level. The Bondi administration presents a unique opportunity to solidify the Allina precedent and curtail prosecutorial overreach. Until then, vigilance in trial preparation and advocacy remains key.
The team at Safe Harbor Group has assisted – and delivered results – for healthcare professionals and their legal teams by conducting investigations, building case defense and providing expert witness services for False Claims Act and other healthcare fraud cases. If you are a healthcare professional in need of a partner to help guide you through complex guidelines and regulation, or a healthcare attorney looking for compliance experts to help in your case defense, contact Safe Harbor Group.
