Providers cannot appeal RAC efforts to re-open payment decisions, court says

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Medicare service providers cannot object to a Medicare Recovery Audit Contractor's (RAC) decision to re-open a payment decision, a federal appeals court ruled Tuesday.

A California appeals court voted to dismiss an inpatient rehabilitation facility's effort to prevent government auditors from investigating a Medicare payment decision. The appeals court sided with a district court's decision to dismiss a challenge brought by Palomar Medical Center in Escondido, CA.

Court documents state that Palomar Medical Center provided therapy to an individual who needed rehabilitative services following a hip surgery. At the time the therapy was delivered, Medicare reimbursed the facility. However, as RAC investigation determined that the services were not reasonable and necessary, and could have been delivered in a less expensive setting such as a nursing home or rehabilitation facility.

According to the decision, the court based its decision on Medicare regulations, which decree that reopening decisions are “not appealable” and are “final.”

The judges wrote that “reopening decisions are final, and final means they cannot be challenged after an audit and revised determination.”

RAC audits are occurring more frequently in hospitals and skilled nursing facilities. An American Hospital Association survey recently found that RAC requests for medical records jumped 22% between the first and second quarter of 2012.

Click here to read the decision.