One of the many authors on which I cut my intellectual teeth was Franz Kafka. Perhaps his most famous novel (left unfinished in his lifetime) was The Trial, where a protagonist, Josef K., is arrested and put on trial by a nameless authority for a crime that is never identified, convicted and put to death by a knife to the heart.
Hospitals across the country can relate to Josef K.’s plight with regard to the RAC process. A recent court ruling has made that comparison seem all the more reasonable.
First, a little bit of background. On page 8 of the RAC Statement of Work, it is stated that a RAC contractor ”must clearly articulate” the good cause with providers for any RAC audit, with the additional documentation requests and the review results letters offered up as examples as to when the contractors must do this. Page 14 of the same 57-page document continues in the same vein, stating that a description of the good cause may include OIG report findings and data or billing analysis. Page 27 states that this should be included for claims that are reopened after one year from the date of payment, in the hopes that this small step “will lend credibility to Recovery Auditor documentation if the Recovery Auditor determination is appealed”.
To briefly refresh you memories, the RAC contractors can go back three years from the date of payment on any claim. Outside of the RAC work plan, CMS auditors can go back beyond a 4-year period only if fraud is suspected.
In 2009, Palomar Medical Center of Escondido, CA filed a lawsuit after a favorable administrative law judge ruling was overturned by a CMS Administrator. The case involved a RAC overpayment determination made during the RAC Demonstration Project concerning a 2005 inpatient rehabilitation claim. The original ALJ appeal decision stated that the contractor did not demonstrate good cause to reopen the claim after one year. CMS’ subsequent overturning of this decision was based on providers being unable to challenge “good cause” as a basis for appeal. On July 28, 2010, a district court ruled in favor of CMS, but Palomar appealed the decision, and the RAC world waited for two years for further news in the case.
On August 22nd, that news was delivered, with the 9th Circuit U. S. Court of Appeals upholding the lower court ruling in favor of CMS. To simplify a 29-page legal decision, the ruling basically affirms CMS’ belief that providers have no recourse to challenge the reasons for reopening a claim as part of an appeal of a CMS audit determination. Since the decision was published on the 9th Circuit’s website only yesterday, there has been no word on whether Palomar intends to take their case to the Supreme Court.
Left to stand, it is safe to predict that this will be incredibly damaging to providers for a long time to come. In an audit situation devised in such a way as to make Franz Kafka jealous, providers of every type now can have their past paid claims looked at by any CMS auditing entity, but can never legally question the reason why that claim was selected for retrospective review.
This stands as further proof that the Medicare Integrity System is deliberately designed in such a way that the monetary goals of the program are met by any means necessary. The deck is stacked against the providers, whether it be by administrative burdens that cannot possibly be tackled, or by increasingly Kafkaesque appeal rules designed in such a way that providers only react, but can never question the reasons why.
The knife used in The Trial did not have a name, but if a hospital was to be asked to name the weapon of their destruction, it would no doubt hold the moniker of “RAC”.