Readers weigh in on Medicare recovery audit program


Recently, I asked readers of sister publication FierceHealthFinance to share their opinions of the CMS Recovery Audit Contractor (RAC) program. As you probably know, the RAC program allows audit contractors to challenge allegedly incorrect Medicare payments (and collect a 20 percent bounty for their trouble). I also asked them to let me know if they had ideas for fixing the program to eliminate potentially perverse incentives encouraging contractors to go overboard.

One, from a reader who has helped draft letters of appeal on allegedly unnecessary admissions, blasts the process:

The majority of RAC medical necessary denials are not valid, as patients indeed have the acuity required to be an inpatient status. There are some cases in which I have to agree with the RAC but these are few and far between. What is needed if the RAC initiative becomes permanent is to hold the RAC to a reasonable standard when making a determination of medical necessity....When [a contractor] states that a patient who died in the ICU under inpatient status should have been outpatient, that speaks to the RAC's knowledge and understanding of medical necessity.

Another reader made some intriguing--yet sensible--suggestions as to how to restructure the program:

Best practices (though short of ideal) for Medicare audits seem to include:

1.  Limit auditors to non-profit corporations
2.  Establish a payment schedule for hospitals that stretches out payments for a set time period (1 year from identification of error?) while not allowing them to hold up payments indefinitely by simultaneously demanding and then stalling an appeal
3.  Require that CMS audit the auditors re-review 10-20% of rejected claims
4.  Require that auditors repay (with interest?) an estimate of total erroneous rejections based on findings from the sample reviewed by CMS prorated across all rejections

My sense is that CMS is pretty committed to the RAC program going forward, so simply railing against it isn't going to work. The key, if you're not happy with how it works, is to document what's wrong and make yourself heard. Here in this newsletter, we'll make sure your views are made public. So keep the feedback coming! - Anne

Suggested Articles

The profit margins and management of Community Health Group raise questions about oversight of managed care insurers.

Financial experts are warning practices about the pitfalls of promoting medical credit cards to their patients.

A proposed rule issued by HHS on Tuesday would expand short-term coverage, a move Seema Verma said will have "virtually no impact" on ACA premiums.