Controversy continues over RAC auditors

Recovery audit contractors, who work for the government to determine if claims have been filed accurately, continue drawing fire for their methods and compensation.

The American Hospital Association urged its members to contact legislators and demand that they support the Medicare Audit Improvement Act, which would change how RACs operate. Specifically, the legislation would limit medical record requests, impose penalties on RACs that fail to comply with program requirements, make RAC performance evaluations publicly available and allow hospitals to rebill denied inpatient claims as outpatient services as appropriate, as FierceHealthcare reported.

The proposed legislation comes on the heels of efforts by the Centers for Medicare & Medicaid Services to delay RAC payments as the agency prepares to request bids and award another round of contracts for the job, MedBill reported.

A disputed change to the program is that RACs won't be able to claim their share of recoveries until the second-level of Medicare's appeals process reaffirms the auditor's findings, the article noted. Auditors previously received pay if their decisions were upheld at the first appeal level. Hospitals have proposed delaying RAC payments until the third stage of appeal, which is decided by an administrative law judge. AHA data show hospitals win appeals at this level about 72 percent of the time, MedBill reported.

Though RACs recovered about $7 billion for Medicare since 2010, "the system has been structured to incentivize RACs to deny claims for their own profit instead of focusing their work on the prevention of errors," according to Forbes. "Since RACs are paid like plaintiff trial lawyers on a contingency fee basis, the more overpayments they manage to find, the more they make for themselves."

In a letter to former U.S. Department of Health and Human Services Secretary Kathleen Sebelius, 111 members of Congress argued for RAC reform through another payment arrangement and a more transparent mechanism through which providers can learn about errors and avoid them later, Forbes noted.

"One of the problems with this audit process, well-intentioned as it might have been, is that it often appears to the innocent physician as a witch hunt," Forbes noted. "There is no place in our country for a reckless bounty hunter combing through patients' personal medical records and harassing dedicated physicians."

For more:
- read the Medbill article
- here's the Forbes article