The handling of the Recovery Audit Contractor (RAC) program by the Department of Health & Human Services (HHS) has raised concerns among members of Congress.
A total of 111 members of the House of Representatives have subscribed their signatures to a letter (via AHANews.com) addressed to HHS Secretary Kathleen Sebelius about RAC program’s operations. “Although the intent of the program is laudable, operational problems within the program have persisted without correction action by the Centers on [sic] Medicaid and Medicare Services (CMS),” the letter states.
In particular, these members of Congress are calling attention to a system that rewards denials rather than accurate reviews by RACs. “They are paid a commission on the dollar amount of the claims they deny, which ranges between 9 and 12.5 percent. Due to this payment structure, RACs are incentivized to deny claims, even when the claims are correct,” they write.
Furthermore, Congress has echoed the comments of the American Hospital Association (AHA) and American Medical Association (AMA) in drawing attention to the burdensome effects that the current RAC program is having on healthcare organizations and providers.
“Without more oversight measures in place, RACs have imposed a huge administrative burden on hospitals, which must spend valuable time and resources to appeal denied claims in order to be reimbursed for Medicare services provided,” the Representatives note in their letter.
The letter contains a number of recommendations for HHS to consider. The first centers on making additional resources available to resolving the backlog of claims appeals being handled by the Office of Medicare Hearings and Appeals (OMHA), which recently announced its decision to suspend claims appeals for the next two years at least.
The second deals with reforming how auditors identify real claim coding and medical documentation errors and making the process transparent to providers in order to avoid similar mistakes leading to future denials.
Third, Congress is calling for a new payment arrangement with auditors so that they are not incentivized for claim denials. The letter’s subscribers have put forward the idea of keeping RACs on a retainer akin to how other government contractors are handled.
Lastly, the letter calls for CMS to adopt the provisions of the Medicare Audit Improvement Act of 2013 (HR 1250), which has the support of 185 Congress members.
While the claim denials by RACs and suspension of appeals still prove a problem for Medicare providers, they also pose a danger to Medicare itself. According to the American Coalition for Healthcare Claims Integrity (ACHCI), the proposed delay could end up costing the Medicare Trust Fund more than $4 billion in unrecovered funds and endanger the long-term viability of the program.
Given the amount of lost reimbursements and waste, fraud, and abuse, the current state of the RAC program remains a lose-lose until it is brought back to the drawing board.
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