House lawmakers reintroduce RAC reform legislation

Two House members are again pushing legislation aimed at improving the Recovery Audit Contractor program, which the lawmakers say causes unnecessary costs and bureaucratic headaches for hospitals.

Reps. Sam Graves (R-Mo.) and Adam Schiff (D-Calif.) introduced the Medicare Audit Improvement Act of 2013, which would make changes to the law that created the RAC program, the decade-old Medicare Modernization Act.

For instance, the legislation would place a hard cap on Medicare auditors' additional document requests—or “ADRs”—to 2% of hospital claims, with a maximum of 500 ADRs for every 45 days. Graves and Schiff introduced a version of the bipartisan legislation last October during the 112th Congress.

“My bill would put in place common-sense reforms allowing auditors to still conduct adequate oversight of billing problems without an open-ended invitation from CMS to continually bombard hospitals,” Graves said in a statement. “Our smaller, rural hospitals are especially ill-equipped to deal with the increased administrative burden.”

The American Hospital Association issued a statement voicing support for the legislation, noting that when hospitals spend the money and resources to fight RAC denials through the Medicare appeals process, they are successful at overturning the RAC denial 72% of the time.

“The legislation provides much needed guidance for auditors while keeping them out of making medical decisions that should be between patients and physicians,” Rick Pollack, executive vice president at the AHA, said in a statement. “It also will improve recovery auditor transparency and allow denied inpatient claims to be billed as outpatient claims when appropriate.”

Meanwhile, a group that represents those who audit both public and private-sector payers says the bill is misguided, especially after billing mistakes last year accounted for more than $65 billion in improper payments.

“While we have not had an opportunity to review the legislation in its entirety, we are discouraged that once again efforts are afoot in Congress that would seek to take the teeth out of recovery programs that have returned more than $3.4 billion to the Medicare trust fund since 2009,” Amanda Keating, a spokesman for the American Coalition for Healthcare Claims Integrity, said in a statement.