The Medicare Recovery Audit Contractor (RAC) program's investigations into potential overpayments overtaxes hospitals, according to a study published in the Journal of Hospital Medicine.
A review of cases at three academic medical centers' audit and appeals data from 2010 to 2013 found RAC reviews of their Medicare benefits repeatedly investigated why patients were assigned inpatient rather than outpatient status. The rate of hospital audits was about 25 times higher than the Centers for Medicare & Medicaid Services reported, according to lead researcher Ann M. Sheehy, M.D., of the University of Wisconsin. Of 101,862 inpatient encounters, RACs conducted audits for 8,110, or 8 percent. Of these, RACs alleged overpayments in 31.3 percent of cases, according to the study.
Sheehy and her team also found lengthy review periods, with an average wait of 555 days for unheard appeals. On average, the institutions employed 5.1 full-time employees for the audit process. While the results of two out of three appeals ultimately favored the hospital, federal progress reports don't make that clear, according to the study. The findings indicate the need for sweeping RAC reform, the authors wrote, including more comprehensive data reporting and data transparency.
"This is a failure in due process," wrote Sheehy. "Hospitals cannot afford to have these claims tied up for so long." The American Hospital Association has long argued RACs do not have sufficient oversight and do not conduct audits impartially.
However, restoring RAC programs could significantly reduce waste in healthcare spending, argued a Forbes column.
As a result of the Centers for Medicare & Medicaid Services' 2013 suspension of most of the RAC program's post-payment auditing, improper payment collection fell dramatically, wrote Forbes contributor Christopher Versace, sinking from $1.5 billion in the fourth quarter of 2013 to $192 million in the fourth quarter of 2014. Further complicating RACs' work, a September court ruling pushed back the awarding of new RAC contracts until late 2015, FierceHealthFinance previously reported.