Senate Finance Committee Discusses Medicare RAC Program with Providers

This morning, the Senate Finance Committee, a committee responsible for the oversight of Medicare, met with providers to discuss their experience with the Medicare Recovery Audit Contractors (RACs). The Centers for Medicare & Medicaid Services (CMS) contract RACs to detect and recuperate improper Medicare program payments.

At the hearing, Chairman Max Baucus (D-Mont.) and Ranking Member Orrin G. Hatch (R- Utah) urged the seriousness of the improper Medicare payments problem. The senators issued statements stressing the importance of RACs working efficiently to ensure the best use of the Medicare trust fund. They voiced their concerns at the high numbers of RAC decisions which are overturned on appeal and the senseless red tape which frustrates providers.

Two providers and one prominent contractor gave witness testimonies to the Committee. Jennifer J. Carmody, CPA, Director of Reimbursement Services for the Billings Clinic of Billing, Montana, discussed the time and expense her organization has incurred appealing inappropriate payment denials. In her witness testimony, she disclosed, “… the combined audit activity becomes overwhelming. In total, we are currently being audited by the Medicare RAC, Medicaid, Medicare Advantage, commercial payers and others.” The Billings Clinic pays an outside contractor, EHR, to assist the clinic with their overflow of audits and appeals. Amongst other recommendations, Ms. Carmody told the Finance Committee that clearer guidance, a limit to the number of record requests, and more effective supervision of the RACs’ performance would help improve the overall RAC process.

Suzie Draper, Vice President of Business Ethics & Compliance at Intermountain Healthcare, also had the opportunity to explain her organization’s RAC experience to the Finance Committee. In Ms. Draper’s testimony, she attributed an aspect of Intermountain’s success with the RACs to her organization’s “own internal audits to proactively review claims, correct them, and develop internal processes as needed to avoid future overpayments.” By paying close attention to the specific posted issues RACs focus on auditing, Intermountain has devoted resources to implementing effective compliance programs.

Ms. Draper also disclosed Intermountain’s burdens imposed by the RAC audits: increased staffing–22 additional full-time employees, a heavy operational burden – the processing of over 16,000 medical records for transmission to the RAC, and duplicate record requests from multiple government auditors. Overall, although Ms. Draper acknowledged benefits of the RAC program, Ms. Draper believes that the RAC program is adding to the cost of healthcare.

Under a contract with CMS, CGI Federal Inc. (CGI), a global information technology and business process services firm, implements the RAC program in Region B. Based on CGI’s experience with the RAC program, Robert Rolf, a Vice President at CGI, also shared observations and lessons learned with the Committee. According to Mr. Rolf’s testimony, “Overall, the Medicare RAC program works well.” Mr. Rolf highlighted the importance of transparency and communication to the program’s accomplishments, CMS’ built in “over auditing” provisions, and the RAC program’s promotion of ongoing process improvement for claims processing and payment.

The hearing today came at a pivotal time, as the Government Accountability Office will soon release its report on the performance of RACs. The providers at the hearing, along with other hospital lobby groups nationwide, are pushing for Congress to pass the Medicare Audit Improvement Act of 2013. The RAC performance report may garner backing for this legislation. The passage of the Act would be beneficial to the providers who spoke at the hearing today by easing some of administrative burdens that RAC audits create. Despite this pending legislation, a thorough compliance plan is essential for providers seeking to decrease the risk of receiving an audit, as well as dealing with audits successfully and efficiently. If you or your healthcare entity need assistance in developing an effective compliance plan, or assistance in Medicare, Medicaid, or third party payer audit defense, please contact our experienced healthcare attorneys at 248-544-0888.