New RAC directive solidifies tension between providers, fraud fighters

A new federal directive will decrease the amount of hospital claims that Recovery Audit Contractors (RAC) can review, effectively handcuffing the program's ability to root out improper payments.

Starting in January, RACs will be able to audit just 0.5 percent of hospital claims with a 45-day period, a significant reduction from the previous 2 percent threshold, according to the Wall Street Journal. The revised approach, outlined in a "technical directive letter," highlights the struggle the Centers for Medicare & Medicaid Services faces in effectively identifying improper payments without placing and undue burden on providers that have been pushing for years to ease the burden of RAC audits.  

Although groups such as the American Hospital Association are applauding the new directive, others, like former Medicare Chief Gail Wilensky, believe the move highlights the challenge of reining in fraud and abuse in a program with a $600 billion budget.

"There is a tension between wanting to make it as easy as you can for providers to participate, and for beneficiaries to make use of the services on the one hand," she told the WSJ. "On the other hand, you want to be mindful of the taxpayers' money."

RAC recoveries have been declining steadily over the past several years amid a whirlwind of scrutiny from provider organizations. The issue has drawn distinct battle lines, with providers referring to the RAC process as a "brutal spanking," while waste-watching advocates have pointed to the program's ability to root as much as $4 billion in fraud, waste and abuse.

For more:
- read the Wall Street Journal article

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