Experts Say RAC Program Flawed Despite Report to Congress
The Recovery Audit Contractor (RAC) program may be over-reporting the amount of improper Medicare payment recoveries, as well as increasing administrative burdens for hospitals, say health care industry experts. The comments came after the Centers for Medicare and Medicaid Services (CMS) sent its second annual RAC report to Congress Feb. 5. According to the report, […]
The Recovery Audit Contractor (RAC) program may be over-reporting the amount of improper Medicare payment recoveries, as well as increasing administrative burdens for hospitals, say health care industry experts. The comments came after the Centers for Medicare and Medicaid Services (CMS) sent its second annual RAC report to Congress Feb. 5. According to the report, which covered fiscal year 2011, RACs identified and corrected $939 million in improper Medicare hospital payments, a jump from FY 2010, when RACs identified and corrected $92 million in improper payments. RACs also returned $488 million to the Medicare Trust Fund in FY 2011, the report said, a figure that was not available in the FY 2010 report. Robert L. Roth, an attorney with Hooper, Lundy & Bookman PC, Washington, D.C., told Bloomberg BNA Feb. 7 the jump in recoveries from FY 2010 to FY 2011 “may not be quite the unqualified success that CMS seems to want to portray in its report to Congress.” Bloomberg BNA is the parent company of Kennedy Information, of which G2 Intelligence is a division. Roth said that much of the growth in recoveries is most likely attributable to the RAC program’s transition from a six-state demonstration project to a national program. Short-Stay Recoveries He said some of the recoveries in the report also may be short-lived, particularly those associated with hospital short stays, which the report said represented a significant part of the FY 2011 recoveries. Roth said the short-stay recoveries “are based on the recovery of the full amount Medicare paid for the inpatient stay, whereas ALJs [administrative law judges] are now routinely remanding appeals of those recoveries for a determination of how much would have been paid if the services had been provided in an outpatient setting (assuming the inpatient stay was not medically necessary).” Roth also said he expected that future reports would show more RAC claims denials overturned. The FY 2011 report said that out of 903,000 claims that were identified as containing overpayments, providers filed appeals for 61,000 claims, and 43.6 percent (26,000) of the appealed claims were overturned. “Given the 43.6 percent error rate and the recent spate of short stay remands to determine payments to be made to the hospitals, providers would be well-advised to be proactive with regard to appealing RAC denials, which could result in a somewhat different report for 2013,” Roth said. Increased Administrative Burdens Robyn Bash, senior associate director for federal relations at the American Hospital Association, told BNA that although AHA recognizes the need for a claims review program, RACs have significantly increased the administrative burden for hospitals. Bash said “a flood of new auditing programs are drowning hospitals with a deluge of duplicative audits, unmanageable medical record requests, and inappropriate payment denials.” AHA, along with four hospital systems, filed a complaint against the Department of Health and Human Services (HHS) on Nov. 1, 2012, arguing that RACs have improperly demanded hospitals return Medicare payments. The complaint, filed in the U.S. District Court for the District of Columbia, asked the court to prohibit an HHS policy that allows RACs to deny claims because a service should have been provided on an outpatient basis, as opposed to an inpatient setting. Inaccurate Claims Denials Hospitals are experiencing a growing number of RAC claims denials that are proving to be inaccurate, Bash said, adding up “to hundreds of thousands of dollars in unjust recoupments of payments for medically necessary care.” She said hospitals have a 74 percent success rate when they appeal their RAC denials, according to the October 2012 AHA RACTrac survey. Bash said not all hospitals have the necessary resources to appeal RAC denials, however, and Medicare lacks the resources to resolve appeals in a timely fashion. “CMS must increase its oversight of contract auditors to prevent inaccurate payment denials and make its overall auditing effort more transparent, timely, accurate, and administratively reasonable,” Bash said.