“Waste neither time nor money, but make the best use of it.” Benjamin Franklin

Recently, the Senate Finance Committee met and discussed the burden of Medicare Recover Audit Contractors (RACs) audits on health care providers.  For a full video of the hearing, click here.  Chairman Baucas began the committee with Benjamin Franklin’s quote.  The implication? RACs are wasting both.

The Senate Finance Committee got it right! The Committee stated that the Medicare RAC program creates an excessive administrative burden on health care providers and results in the denial of legitimate claims. Two representatives from separate health care organizations spoke to the Senate Finance Committee hearing. Bipartisan panel leadership also expresses concern about burdens RACs place on providers. The Medicare RAC program is designed to detect and recover improper Medicare payments.

Chairman Baucas gave an example of immense administrative burden by describing the efforts of Kalispell Regional Hospital, a small regional hospital in Montana, undertaken in response to the Medicare RAC audits.  According to Chairman Baucas, Kalispell has spent over $1 million on RAC compliance, hired 3 additional staff members to exclusively concentrate on RAC audits, and devoted a total of 8 staff members to RACs.  It was estimated that 8600 hours/year of Kalispell’s internal staff is devoted to RAC audits.

Charles Pierce, the Chief Financial and Information Officer of Kalispell, complained of 3 main problems with the RAC audits:

1. Randomness,

2. Overzealousness, and

3. The fact that there is no penalty on RACs for getting the audits wrong.

Other complaints included that the RACs request the same documents over and over, the same issues are audited multiple times, and the same patients were audited multiple times. Another complaint was that the cost of appeal lies on the health care providers, not the RACs.

When the representative spoke on behalf of the RACs, Mr. Rolf, the rep stated that CMS had audited the RACs accuracy and all RACs had accuracy rates over 90%. I thought, maybe he meant CCME, not CMS.

Does this not sound like the RAC program in North Carolina for Medicaid? This Senate Finance Committee meeting may as well have been held in Raleigh, NC state and discussing Medicaid RACs.

How did these particular providers get heard by Washington? Why did Washington listen to these providers’ complaints about Medicare records?

Answer? Generally, these are hospital providers and have both more influence and money than the average individual provider in North Carolina.

In NC, the Medicaid RACs are damaging (so far) behavioral health providers, dentists, and durable medical equipment providers. The RACs are expanding now to audit short-term, inpatient hospital stays, x-rays, long-term care and laboratories.

By federal statute, the RACs are not to place undue burden on providers. Yet, both Medicare and Medicaid providers are undergoing severe administrative burden because of the RACs.

Going back to the Senate Finance Committee, the RAC rep, Mr. Rolf, also seemed to indicate that the Administrative Law Judges (ALJs) did not have the clinical knowledge to review these RAC audits. Mr. Rolf, I respectfully disagree (not that all ALJs do not have the clinical knowledge, but the inference that clinical knowledge is needed).  When we have lawsuits regarding a car wreck, do we have an accident reconstruction expert as the judge?  Plus, these RAC audits have less to do with clinical criteria and more to do with the RAC auditors simply mis-applying the administrative policies. Besides, if we are going to compare clinical knowledge, let’s compare the RAC auditors’ clinical knowledge to that of the actual provider rendering the services.

Two Senators on the Committee touched on two very important issues that I want to highlight:

Senator Enzi stated that he was concerned that the RACs are compensated by contingency fees.  Mr Rolf stated that the RACs are paid equally for overpayments AND underpayments.  I am not sure what particular RAC Mr Rolf was representing, but in NC, our RACs are paid a contingency fee for OVERpayments and a flat fee of $100 for UNDERpayments.

Senator Isakson stated, “There is a fine line between recovering payments that are clearly improper and questioning the judgment call made by a professional at a particular moment of time.” What standard are these auditors using?

Mr Rolf explained that the auditor uses, in part, “Clinical Review Judgment,” basically the medical opinion if the auditor during the review.  Hmmmmmm…so many interesting issues.

I have been asked over and over by providers, do we have recourse? How can we fight back against the Medicaid RAC harassment. Besides running for governor, winning, and conducting a complete overhaul of the Medicaid RAC system, my only suggestion is a lawsuit.  The problem with lawsuits is that lawsuits are expensive.  The Medicaid RACs are causing financial stress on providers already.  For a provider to fund a legal battle against the RACs, that provider must have excess money.

This is one reason we are trying to band a group of health care providers together to fight against the harassment.  But, as of now, we are concentrating on behavioral health care providers.  Interested? Click here to register. Or contact me directly with questions. [Warning: That was a legal advertisement. Please do not click if you are not interested in the lawsuit. Also, feel free to go to any other attorney]

But until we have changes in the Medicaid RAC audits, at least the Senate Finance Committee is investigating Medicare RACs…you got to start somewhere.