“The primary responsibility of RACS is supposed to be accessing payment rates, but they are more like bounty hunters who prosper financially on each rejected claim,” said Rick Pollack, executive vice president of the AHA. The association has popularized referring to the RACs as bounty hunters because the four current RACs can keep from 9% to 13% of what they flag as inappropriate charges.
The Recovery Audit Contractor program outlined in the Medicare Modernization Act of 2003 created a pilot program for the RACs to identify and recover improper Medicare payments to healthcare providers under fee-for-service (FFS) Medicare plans. The nationwide version of the program was ordered by a 2006 law and didn't start until Fiscal 2010. Current contracts are slated to end June 1.
The AHA has found 49% of auditor payment denial of claims are appealed, and 72% of appeals work out in the hospital's favor. RACs would dispute that figure, noting recovery rates can be calculated differently depending on which level fo the appeals process is examined.
In response to hospital RAC concerns, Sens. Roy Blunt, (R-Mo.), and Mark Pryor, (D-Ark.) last year introduced the Medicare Audit Improvement Act as a companion to a similar bill in the House.
Chief among the worries for hospitals, especially some smaller ones, is the amount of document requests by auditors. The legislation would limit auditors to asking for additional documents related to a maximum of 2% of a hospital's Medicare claims. It also would impose financial penalties on RACs that don't comply with federal laws.
The CMS in March initiated a pause in any new document requests to providers from RACs while it bid out new RAC contracts. In late April, the CMS proposed a change that essentially makes RACs wait longer in the appeals process before collecting their fees.
Follow Virgil Dickson on Twitter: @MHvdickson