Palomar Med. Ctr. v. Sebelius (Summary)

MEDICARE RAC AUDIT

Palomar Med. Ctr. v. Sebelius, No. 10-56529 (9th Cir. Sept. 11, 2012)

The United States Court of Appeals for the Ninth Circuit affirmed a trial court’s grant of summary judgment in favor of the Secretary of the Department of Health and Human Services (“HHS”) because it concluded that the Secretary’s decision to reopen a Medicare claim could not be appealed.  In this case, a Medicare provider was paid in full for rehabilitation services provided to a patient after hip replacement surgery, but the claim was subsequently reopened for a review of the Medicare compensation under the Recovery Audit Contractor (“RAC”) program.  The RAC determined that the Medicare provider had been overpaid because the rehabilitation services had been provided at a hospital instead of a less intensive setting such as a skilled nursing facility.  Thus, the RAC concluded that the rehabilitation services provided to the patient had not been medically reasonable and necessary, and it held the Medicare provider liable for the alleged overpayment.

According to the regulations governing Medicare compensation, the Secretary of HHS’s decision to reopen a Medicare claim is “final” and “not appealable.”  Despite this rule, in its appeal of the RAC’s revised determination of overpayment for the patient’s rehabilitation services, the Medicare provider sought to obtain review of the original decision to reopen the claim at issue in the case.  The court rejected the Medicare provider’s challenge of the original decision to reopen the case, concluding that the language of the applicable regulation was clear and that the decision to reopen a Medicare claim could not be appealed.  Thus, the court affirmed the trial court’s grant of summary judgment in favor of the Secretary of HHS.