Healthcare News & Insights

RAC audits: AHA calls for a federal investigation

The American Hospital Association (AHA) is imploring the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) to investigate the inaccuracy of recovery audit contractors (RACs). 

If your hospital hasn’t been audited by the Centers for Medicare & Medicaid Services’ (CMS) RACs, consider yourself lucky. If you have, you know what a burden it is on staff and how costly it can be for facilities.

But RACs aren’t the only audit contractors hospitals have to deal with. There are the MACs (medicare administrative contractors) and the ZPICs (zone program integrity contractor). All three help detect and correct billing errors and abuse for CMS. And they can all audit a facility at the same time.

The AHA’s issue isn’t with the need for auditors to identify billing mistakes. Rather it’s with the deluge of redundant audits and record requests, and — this is the biggie — the inaccuracy in determining whether hospitals received overpayments.

According to the AHA’s quarterly RACTrac survey of hospitals, 75% of appealed RAC decisions are ultimately reversed. That means the RAC auditors are often wrong, but then never receive any kind of smack on the wrist for their inaccuracies.

In fact, RACs receive a percentage of the funds they deem as overpayments. So the more money RACs deny, the more money they make.

Problem fix

In a letter to the Inspector General Daniel Levinson, the AHA said point blank that the inappropriate denials “must be halted.” In addition, the AHA wants the OIG to streamline its integrity programs so duplicate audits and record requests will stop wasting hospital personnel’s time and resources.

So how should the OIG go about this?

The AHA says that holding RACs accountable for the audit process would improve things greatly. For example, make RACs improve their accuracy when it comes to claim denials or face financial penalties.

Limiting the number of allowable requests for medical records is another way the AHA believes would streamline the RAC audit process.

Legislation, which the AHA supports, is also being introduced to reduce some of the authority CMS’ RACs have over claim investigations. Reps. Sam Graves (R-MO) and Adam Schiff (D-CA) proposed the Medicare Audit Improvement Act which would require physician review for denials and allow inpatient claims to be billed as outpatient claims when appropriate.

To follow the bill’s progress, click here.

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