Providers Can't Challenge Year-Old RAC Audits, Court Rules

The Ninth U.S. Circuit Court of Appeals has ruled that healthcare providers cannot challenge Medicare Recovery Auditors' review of claims that are more than a year old, according to an American Medical News report.

Palomar Medical Center in Escondido, Calif., filed suit in 2009 against HHS, challenging a 2007 RAC audit that reopened a claim 20 months after the claim's initial payment. The audit found the hospital was overpaid for the claim, as medical services were deemed "not reasonable and necessary," according to the report.  

Under Medicare regulations, RACs can review claims less than a year old for any reason. If the claim is between one to four years old, RACs must have a good cause to reopen the claim. If older than four years, auditors must have clear evidence to review the claim.

Palomar fought the RAC finding, arguing that the RACs did not have the right to reopen the claim under the regulated time frame.

An administrative law judge ruled that the auditors had not demonstrated good cause to examine the claim, but the Medicare Appeals Counsel reversed that decision, claiming the ALJ lacked jurisdiction to determine whether the RAC had lawfully opened the claim.

Palomar appealed the counsel's decision, but a district court ruled in favor of HHS in 2010. In its August decision, the Ninth Court of Appeals ruled that "in view of the goals of the RAC program, and the secretary's regulations stating that decisions to reopen are 'final' and 'not appealable,' we hold that the issue of good cause for reopening cannot be raised after an audit's conclusion and the revision of a paid claim for medical services," according to the report.

The ruling holds many implications for physicians and hospitals, which must accept audits without challenge, according to the report. Generally, the further back an audit goes, the more disruptive it is for providers, as it can create a larger administrative burden.

More Articles on Hospitals and RACs:

Survey: Non-Profit Hospitals Undergo More Audits Than For-Profits
25 Statistics on Hospitals and RAC Audits
75% of Appeal RAC Denials Overturned in 1Q of 2012


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