In a 6-0 decision, the Wisconsin Supreme Court reinstated a 2016 circuit court order prohibiting the Wisconsin Department of Health Services (DHS) from recouping Medicaid payments made to Medicaid providers “if the provider’s records verify that the services were provided and the provider was paid an appropriate amount for such services, notwithstanding that an audit identified other errors or noncompliance with [DHS] policies or rules.”

The Supreme Court labeled DHS’ recoupment policy for such services provided a “perfection policy” and held that such a policy was not consistent with Wisconsin’s Medicaid recoupment statute or administrative rules.

The case, Papa vs. Wisconsin Department of Health Services, involved the extent of DHS’ authority to require repayment from providers for previously paid claims based on failure to follow all documentation and other technical requirements contained in a confusing series of administrative rules in the Forward Wisconsin Provider Handbook, technical bulletins and other sources. In 2016, a Waukesha County Court found that DHS’ position that compliance with all technical and documentation requirements by providers as a prerequisite for payment amounted to a “Perfection Rule” that exceeded its authority to recoup payments otherwise properly made. However, the Wisconsin Court of Appeals overturned that decision in July 2019.

In today’s 6-0 decision, the Supreme Court reversed the Court of Appeals and restored the county court’s 2016 order limiting DHS’ authority to recoup payments, concluding that “so long as DHS can verify that a covered service was actually provided, the claim was appropriate, and the claim was accurate, DHS cannot recoup payments based on a record imperfection. A record imperfection alone is not an independent basis for recouping payments.” The decision provides clarity and greater certainty for physicians, who could otherwise face demands for repayment of thousands of dollars months or years after the fact based entirely on unintentional documentation errors.