The Department of Health & Human Services’ Provider Reimbursement Review Board (Board) came in for some withering criticism last Friday from the federal court hearing the appeal of University of Chicago Hospital from the dismissal of a Medicare appeal.  The court observed that the public views the Medicare system as “an unfeeling bureaucracy stuffed with arcane rules and impossible-to-determine-requirements,” and then proceeded to agree, throwing out the agency’s action as arbitrary and capricious.

The case turned on whether the hospital missed a filing deadline in an appeal of its reimbursement for the 2005 fiscal year—one of eight years under appeal.  Scheduling involved due dates for preliminary position papers, final position papers and hearing dates for each of the eight appeal years.  Two of the many due dates on the Board’s original schedule were January 1 and June 1, 2013, for the hospital’s 2005 preliminary and final position papers, respectively.

Everyone—the hospital, the Medicare contractor, and the Board—agreed that the original schedule was unworkable because the appeal years were scheduled out of order. That won’t work because one year’s reimbursement depends in part on finances for earlier years.  So a new schedule was agreed on—one that scheduled the years sequentially.

The new schedule moved the due date for the hospital’s 2005 final position paper forward by three months, from June 1 to September 1.  It was silent on the due date for that year’s preliminary position paper.

The hospital assumed that the due date for its preliminary paper was moved forward, along with the due date for its final paper, because absent that assumption, the original schedule made no sense.  For example, some final papers would be due before preliminary papers for the same years.

But when January 1, 2013—the original due date—came and went, the Board yelled “gotcha” and dismissed the appeal on the grounds of the missed deadline.

The court’s view of the Board’s action: “If that is not arbitrary and capricious, those words have no meaning.”

But it could have been worse for the Board.  The court might have wondered aloud why, in 2014, the Board was still mulling over appeals dating back to 1999.