Providers upset about what they say are unintended effects of Medicare's main overpayment recovery program will get a chance to air their grievances Tuesday on Capitol Hill and perhaps garner support for legislation to change it.
Two providers are expected to tell members of the Senate Finance Committee about their organizations' experiences with the Medicare Recovery Audit Contractor program. A prominent contractor also is expected to testify.
Hospitals increasingly have raised concerns about the RAC program, which has used private companies since 2003 to detect and recover Medicare overpayments to healthcare providers and has paid them a percentage of those recovered funds. Providers complain that the RAC retrospective reviews of treatment decisions are among a growing number of duplicative audits that are expensive to comply with and result in inappropriate payment denials.
Auditors counter that their findings have saved Medicare billions of dollars. For instance, the RAC program cost $129 million in fiscal 2011 while returning nearly $500 million to the Medicare Hospital Insurance Trust Fund, according to the CMS.
Supporters of strong Medicare anti-fraud efforts say healthcare industry lobbying of Congress is a big reason why Medicare for so long has been vulnerable to waste, fraud and abuse costing the program hundreds of billions of dollars over the years.
The hearing comes as members of Congress await a highly anticipated Government Accountability Office report on the performance of RACs. Providers hope that report may generate support for legislation in both the House and Senate— the Medicare Audit Improvement Act—which would limit the frequency of audits and establish penalties for auditors when their decisions are overturned on appeal, according to industry experts.
Support for the audit bill was one of the three legislative priorities that Richard Pollack, American Hospital Association vice president, urged hospital executives to emphasize to members of Congress during their April lobbying blitz on Capitol Hill. Those visits were followed by the House bill's cosponsor count jumping by 47 representatives to a total of 86 cosponsors. However, little support has emerged for the Senate version, which has only two cosponsors and has yet to have a hearing. Both Republican and Democratic members of Congress have insistently urged the Obama administration to strengthen efforts to root out Medicare waste, fraud and abuse.
Although hospital advocates praise the goal of the audit programs to reduce inappropriate payments, they say changes are needed to improve the accuracy of the program. They highlight the 72% reversal rate among challenged RAC rulings, according to an AHA member survey.
Supporters of the Medicare audit program underscore that only 44% of the RAC ruling are challenged, which underscores their overall reliability.
The CMS has attempted to address hospital complaints about disputes over the differences between inpatient and outpatient care. The agency issued a proposed rule in March to allow hospitals to rebill hospital services found to be improper by RAC audits as physician services. But a separate agency notice limited such rebilling to one year—less than the duration of some audits.
The regulatory changes drew little hospital support. AHA president Richard Umbdenstock announced in a letter to members that the trade group would continue a lawsuit filed last November against the CMS challenging its continuing refusal to pay for certain claims denied by RACs.
The regulatory changes also drew opposition from the American Coalition for Healthcare Claims Integrity, an auditor advocacy group.
“Since 2009, auditors have been responsible for identifying and correcting nearly $5 billion in improper payments each year that are related to inpatient hospital claims,” Amanda Keating, a spokeswoman for the auditor group, said in a written statement when the rule was issued. “However, implementation of the proposed rule could result in an endless loop of rebilling and cost Medicare billions of dollars each year.”
The CMS also proposed other RAC changes earlier this year. The changes would require contractors to presume an inpatient hospital admission was reasonable and medically necessary if a beneficiary required more than one Medicare utilization day. Such treatments are defined by the CMS as lasting at least two midnights.
The AHA rejected that time-based change as a way to address inappropriate audit findings against unnecessary hospital stays. It instead suggested a series of other changes, including penalties on RACs whose decisions are reversed.
“No matter the merits of their cases, there is a limit to the number of denials hospitals can realistically shepherd through the appeals process, making CMS' current 'penalty' an ineffective disincentive to discourage improper denials” by RACs, Pollack wrote to the CMS on June 19.
Follow Rich Daly on Twitter: @MHrdaly
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