Bill in Congress would severely clip RACs' wings

The American Hospital Association (AHA) has undertaken its first major legislative campaign to put Recovery Audit Contractors (RACs) in what it believes is their correct place.

The trade association supports a bill in Congress that would significantly change the way RACs conduct business, AHA News Now has reported. The bill, which has bipartisan authorship, would change RAC payment structures from their current contingency payment--which allows them to keep between 9.2 percent and 12.5 percent of claims they claw back--to a flat fee. It would also impose financial penalties against RACs if a significant number of their claims are overturned during the appeals process.

The legislation would also give hospitals the ability to rebill some claims. And RACs that decide to reject a claim must base the decision solely on the information available to the treating physician at the time he or she rendered care. 

The RAC program has been a successful financial management tool for the Centers for Medicare & Medicaid Services (CMS) since it was introduced five years ago. In 2013, RACs clawed back nearly $4 billion in claims payments, primarily focused on short inpatient stays that the RACs say should have been billed at the lower inpatient rate. And the program's success has grated on hospitals, which claim RACs place an unnecessary administrative burden on their operations often put them through a lengthy and expensive appeals process and ultimately impact patient care.

"Physicians do what is best for their patients and make medical decisions based on the care needs of their patients. But recovery audit contractors second guess medical decisions and divert resources from patient care," AHA Executive Vice President Rick Pollack said in a statement.

Each of its member hospitals has an average $1.4 million worth of claims under appeal, with some larger institutions appealing as much as $20 million in rejected claims at any time, according to a report recently issued by AHA. 

To learn more:
- read the AHA News Now article 
- check out the AHA statement 
- here's the AHA RAC report (.pdf)