Payment recovery audit program needs overhaul: Doctors to CMS

AMA Wire
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A “bounty-hunter” Medicare program that takes back payments from physicians must be overhauled, physicians told the Centers for Medicare & Medicaid Services (CMS) in a letter (log in) Wednesday, pointing to a two-year backlog of appeals and prohibitive expenses that result from excessive audits.

The AMA letter points out that CMS’ own reports have shown that appeals have skyrocketed as a result of the recovery audit contractor (RAC) program. When appeals from the RAC program entered the Office of Medicare Hearings and Appeals’ (OMHA) workload in 2012, the department saw a 42 percent increase in the total number of claims appealed. That number then increased 506 percent between 2012 and 2013.

And while OMHA can’t keep up with appeals, more than 60 percent of RAC determinations that physicians and other Medicare Part B providers appeal are overturned once reviewed.

“The AMA does not support improper billing, but the RAC auditors are often wrong, and their bounty-hunter-like tactics have caused physician practices undue hardship and expense,” AMA President Robert M. Wah, MD, said.

“As CMS awards new contracts in the RAC program, it must consider putting an end to policies that cause burdens for physicians and encourage RAC auditors to incorrectly deny claims,” Dr. Wah said.

Physician costs from the RAC program are tremendous. A recent survey conducted by the Frank Cohen Group found that the average cost to appeal a RAC audit was about $110 per claim, and the average cost of simply being audited was $86.

At the same time, auditors are paid a sizeable commission of approximately 9.0-12.5 percent for denied claims, the letter points out. “Only if a claim is later overturned on appeal must the RAC pay back their contingency fee, providing little incentive for RACs to ensure that they limit their audits,” the letter said.

The AMA is calling on CMS to make five strategic changes to fix the RAC program:

  • Contractors should be subject to financial penalties for inaccurate audit findings.
  • RAC audits of physicians should be performed by a physician of the same specialty or subspecialty and should be licensed in the same jurisdiction.
  • Physicians should be able to rebill for recouped claims for a full year following recoupment.
  • CMS should provide an optional appeals settlement to physicians, similar to that provided to hospitals for short-term care.
  • CMS should retain the current medical record request limits and allow medical record reimbursement for physicians.

This call for an overhaul of the RAC program is part of the AMA’s commitment to enhance professional satisfaction and practice sustainability. The association is supporting policies at every level of government to improve patient health, enhance access to affordable, quality care, and protect the privacy and trusted interactions patients have with physicians.

Visit the AMA’s recovery audit Web page to learn more about recent advocacy efforts on this issue.

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