AHA wants contractors to cough up money in short-stay settlement offer

The protracted war between hospitals and recovery audit contractors (RACs) over how to handle short-stay payment appeals took a new turn as the American Hospital Association (AHA) demanded a new concession in a recent settlement offer over RAC clawbacks.

Some 800,000 claims disputes are currently under appeal by hospitals--about half of all clawbacks in total. That has created a backlog that could take two years or more to resolve. As a result, last month the Centers for Medicare & Medicaid Services offered to settle the cases en masse for 68 cents on the dollar for amounts under dispute. The settlement, if accepted by the hospitals, will likely total hundreds of millions of dollars. But the AHA wants RACs to give up some money as well.

In a letter sent last week to CMS Administrator Marilyn Tavenner, AHA Executive Vice President Rick Pollack wrote he wanted to know if the RACs will surrender any payments they received as part of the initial claims dispute.

"Specifically, we are inquiring about whether the RACs will be required to forfeit any of the contingency fee they received for those denials. As you are aware, when a hospital prevails in its appeal of a denied claim, the RAC must return the entire fee paid for that denial," Pollack wrote. 

Pollack later added that "hospitals have informed us that they consider the decision on RAC fees to be one of fundamental fairness that will impact their evaluation of the terms of CMS's offer." Pollack added that CMS has yet to respond to such a query. Hospitals have until Oct. 21 to agree to settle any outstanding appeals with CMS.

The RAC program appears to be an unqualified success in terms of cutting Medicare costs--RACs clawed back billions of dollars in payments last year.

To learn more:
- check out Pollack's letter (.pdf)