Senate committee pushes for RAC reform

A bipartisan senate committee report recommended paying Medicare recovery audit contractors (RAC) based on reductions of improper payment rates in their jurisdictions instead of the volume of improper claims recovered, Bloomberg BNA reported.

Sen. Susan Collins (R-Maine) said at a roundtable discussion on the effectiveness of Medicare integrity contractors that more audits haven't resulted in fewer overpayments. And providers complain of audit-related administrative demands.

Case in point: Margaret Hambleton, vice president of corporate compliance at San Francisco's Dignity Health, reported that her organization spent more than $39 million answering RAC requests since 2009, Bloomberg BNA noted.

"We are taking, I would say, a brutal spanking," Tim Fox, chief executive of Fox Rehabilitation in New Jersey, told The Philadelphia Inquirer.

His company is winning 85 percent of its third-level appeals of RAC denials, the paper reported. But a growing number of audits has saddled Fox's company with documentation burdens and added costs. These, coupled with a 15 percent cut in Medicare payments for outpatient physical therapy, caused the company to lay off 62 employees and reduce therapists' pay, The Inquirer noted.

RAC representatives at the roundtable emphasized that they examine only 2 percent of audited providers' paid claims, Bloomberg BNA noted. Chad Janak, vice president of Connolly Healthcare--the RAC for Region C--told discussion participants that Connolly "returned more than $3 billion to the Medicare Trust Fund and also returned more than $300 million to hospitals as the result of underpayments we have identified," Bloomberg BNA reported.

But Medicare's improper payment rate jumped from 8.5 percent in fiscal 2012 to 10.1 percent in fiscal 2013, according to the article. And roundtable participants commented on the lack of coordination between government auditors and agencies.

Hospitals, meanwhile, are protesting audits conducted by the Office of Investigations, calling them redundant versions of RAC lookbacks, as FierceHealthFinance reported. And American Hospital Association lobbying led to a moratorium on some types of RAC audits.

For more:
- read the Bloomberg BNA article
- here's The Inquirer article