Electronic Health Records


AHA Supports Bill to Improve Medicare Audits, Work of RACs

By Kyle Murphy, PhD

The American Hospital Association (AHA) applauding the sponsoring of a new bill to improve the work of Medicare Recovery Audit Contractors (RACs). In a letter to Senator Roy Blunt (R-MO), sponsor of Medicare Audit Improvement Act of 2013 (S. 1012), the association has emphasized the need for audit reform.

“The Medicare Audit Improvement Act of 2013 provides much needed guidance for medical necessity audits, keeping auditors out of making medical decisions that should be between patients and their physicians,” writes AHA Executive Vice President Rick Pollack. “In addition, recovery auditors are not targeting widespread payment errors and are making subjective decisions on short-stay cases; their operational problems are persistent and widespread.”

Although the legislation is not yet available through the Library of Congress, the AHA has provided details about what the bill would do:

• Establish a consolidated limit for medical record requests;

• Improve auditor performance by implementing financial penalties and by requiring medical necessity audits to focus on widespread payment errors;

• Improve recovery auditor transparency;

• Assure due process appeals rights for hospitals;

• Allow denied inpatient claims to be billed as outpatient claims when appropriate; and

• Require physician review for Medicare denials.

According to the AHA, these auditing programs though well-intentioned lead to real costs to healthcare organizations:

No one questions the need for auditors to identify billing errors; but the flood of auditing programs, along with confusing and conflicting regulations, is drowning hospitals with a deluge of redundant audits, unmanageable medical record requests and inappropriate payment denials. Redundant government auditors are wasting hospital resources and contributing to growing health care costs.

Another sticking point for the AHA is the issue of contingency fee payments that could ultimately lead to a serious conflict of interest for RACs:

While the AHA has zero tolerance for real fraud and abuse, these recovery auditors are paid contingency fee payments, a potential conflict of interest, leading to concerns that they focus on claims and services that have the highest likelihood of error, in order to increase their fees. Hospitals are experiencing a significant number of inappropriate denials amounting to hundreds of thousands of dollars in unjust recoupment payments for medically necessary care.

The problem with the increasing number of denials is the number of them that are subsequently overturned when contested by hospitals. The AHA data indicates that are nearly three-quarters of RAC denials (72%) have been successfully overturned.

The bill is currently sitting with the Senate Finance Committee which must determine whether to send it on to the House or Senate as a whole.





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