H.R. 2156 Introduced, Seeks RAC Reform in Fees and Fines

Another Bipartisan Bill?

Visit our Bill Tracker Page to see the bill's progress through Congress

Visit our Bill Tracker Page to see the bill’s progress

Two Congressmen introduced the Medicare Audit Improvement Act of 2015 (H.R. 2156) calling for significant and fundamental changes to Medicare’s national Recovery Audit Contractor (RAC) program on April 30, 2015. Representatives Sam Graves (R-MO) and Adam Schiff (D-CA) co-authored the bill in an effort to correct the faulty design of the program, intended to improve the accuracy of Medicare and Medicaid payments. While the program has pleased Congress by collecting over $9 billion in Medicare reimbursement denials, hospitals have learned to appeal most of those denials, where they either win or have the denials reversed over 77% of the time.

Reeling in RAC Fees

AHA's excellent report details the financial burden that RACs place on hospitals. Click the image to download a copy of the report.

AHA’s excellent report details the financial burden that RACs place on hospitals. Click the image to download a copy of the report.

H.R.2156 would direct the Centers for Medicare & Medicaid Services (CMS) to replace the RAC contingency fee structure with a flat fee, which will hopefully reduce the financial incentive behind the overzealous auditing practices now used by existing RACs. The bill would also require lowering payments for poor RAC performance, but it remains to be seen how the RACs would be measured and judged on performance. Other significant requirements would call for a change in CMS’s rebilling rules to allow hospitals to rebill claims when appropriate; and require RACs to base their inpatient admission decisions on only the information the physician had available at the time the admission order was written. While this last requirement is CMS’ stated policy, it is only given lip service by CMS, and is very often not enforced in RAC denials.

AHA’s RAC Cloud

click the image to see the full size infographic and find out how to embed it on your own web pages

Click the image to see the full size infographic and find out how to embed it on your own web pages

The American Hospital Association (AHA), a supporter of the bill, just released a report and an infographic detailing how the ill-designed RAC program has created a mind-numbing number of inappropriate denials, with the contractors often recouping hospital payments for appropriate and necessary medical care. While the RAC contractors suffer not at all for submitting these erroneous denials, the hospitals and beneficiaries suffer the full burden of mounting (and paying for) appeals that now sometimes take over two years to get a decision from a disinterested third party (a judge). These judges, the Administrative Law Judges, are not available until the third level of appeal. Ultimately, the result of this program is that it creates a significant drain on hospital resources, diverting those resources unnecessarily from a hospital’s main job, treating and caring for patients.

Caring for People

Click the image to open the video in a new window

Click the image to open the video in a new window

While auditing, as well as proper record keeping and billing practices are all necessary, the RAC program does not fulfill its stated purpose, to prevent future improper payments, instead managing to add to the administrative costs of healthcare services. As the esteemed Dr. Lawrence Weed famously said, “…after all, we’re not taking care of records, we’re taking care of people.” Hopefully, this new bill will help hospitals get back to the business of healthcare, instead of record keeping.

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One Response to H.R. 2156 Introduced, Seeks RAC Reform in Fees and Fines

  1. Pingback: H.R. 2126: Another New Bill About ICD-10 | Appeal Academy

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