Agendia Vs Azar; LCDs Ruled Invalid without notice & comment under APA; but Reversed at Appeals Court
Agendia, a molecular lab in California, has disputed denials of claims in 2012 and 2013 under an early MOLDX LCD and in a period when California was directly under Palmetto MAC LCDs.
Agendia used constitutional arguments against LCDs. They won at the federal court level in 2019 but the decision in their favor was reversed at the appeals level in July 2021.
Note - I am not an attorney and I am providing my best "English language" summary of the cases.
The case was delayed due to ALJ backlog from 2014 to 2018. An ALJ supported payment in 2018, finding the claims were "reasonable and necessary" despite the position of the MAC and QIC. But it didn't end there.
The Department Appeals Council overruled, saying the ALJ in this case had not clearly explained why he was overriding the LCD. (The judge is supposed to "grant deference" to LCDs and MAC medical directors, although he has the right to do overrule them, with justification.)
Agendia appealed to federal district course. HERE. Agendia v Azar, 10/29/2019. Agendia argued that
- LCDs are an illegal delegation of responsibility from CMS to a private entity. This is a constitutional issue, what the federal government can delegate.
- LCDs violate the Administrative Procedures Act. This is a statutory issue.
- LCDs were arbitrary and capricious. (Arbitrary is a judicial concept related to implementation of APA and other issues).
- LCDs are not an illegal delegation, as CMS continues to supervise MACs and LCD claim decisions can be overturned (even if "deference" is paid to the LCD) and LCDs can be invalidated under a beneficiary's LCD challenge.
- LCDs do violate the administrative procedures act. They set operational CMS policy. They may set CMS's initial policy. Regardless of whether LCDs have a public comment period of sorts, there is no statutory basis for this to be different than APA notice and comment rulemaking. (There IS, however, a separate statutory comment provided for NCDs.*)
- The judge need not address #3 because he has decided the case on #2.