Glob. Rescue Jets, LLC v. Kaiser Found. Health Plan, Inc.

Glob. Rescue Jets, LLC v. Kaiser Found. Health Plan, Inc.

Opinion

WATFORD, Circuit Judge:

Plaintiff Global Rescue Jets, which does business as Jet Rescue, provided international air ambulance services to two patients who became seriously ill while in Mexico. Both patients were enrolled in Medicare Advantage plans offered by defendant Kaiser Foundation Health Plan, Inc. Jet Rescue flew the patients from a hospital in Mexico to a hospital in San Diego and billed [*4]  Kaiser for those services at Jet Rescue's usual and customary rates. Kaiser paid only a fraction of the billed amount, however, because in its view Jet Rescue's services were covered by Medicare and thus subject to payment at the much lower Medicare-approved rates. Jet Rescue contends that its services were not covered by Medicare and that, under the terms of Kaiser's plans, it is entitled to be paid in full.

Jet Rescue brought this action against Kaiser to recover the additional sums Kaiser allegedly owes. The district court dismissed the action for lack of subject matter jurisdiction on the ground that Jet Rescue failed to exhaust its administrative remedies under the Medicare Act. On appeal, Jet Rescue argues that it was not required to exhaust administrative remedies before filing suit and that the exhaustion requirement should have been excused in any event. We reject both arguments and accordingly affirm the district court's judgment.

Medicare is a federally subsidized health insurance program covering the elderly and disabled. Under Parts A and B of the program, which we will refer to as original Medicare, the federal government pays health care providers on a fee-for-service basis at rates [*5]  approved by the agency that administers Medicare, the Centers for Medicare and Medicaid Services (CMS). CMS is an agency housed within the Department of Health and Human Services.

In 1997, Congress amended the Medicare Act by adding a new Part C, which created the program now known as Medicare Advantage. Balanced Budget Act of 1997, Pub. L. No. 105-33, § 4001, 111 Stat. 251 (1997).] Under the Medicare Advantage program, individuals eligible for Medicare may enroll in health insurance plans offered by private entities known as Medicare Advantage organizations, rather than receive benefits on a fee-for-service basis under Parts A and B. 42 U.S.C. § 1395w-21(a)(1). CMS enters into contracts with Medicare Advantage organizations under which CMS pays a fixed monthly sum per enrollee, § 1395w-23(a)(1)(A), and in return the Medicare Advantage organization agrees to provide the health care services that the federal government would have paid for under Parts A and B. § 1395w-22(a)(1). A Medicare Advantage organization thus assumes, with respect to each enrollee, "full financial risk on a prospective basis for the provision of the health care services" that would have been covered under original Medicare. § 1395w-25(b).

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