Since 1997, Kevin Brady has been serving as the U.S. Representative for Texas’s 8th congressional district. Congressman Brady holds a number of key leadership posts in Congress, though, for our purposes at least, none are as influential as his position as chairman of the Subcommittee on Health for the House Ways and Means Committee.

For Brady and the subcommittee, comprehensive Medicare reform is the ultimate goal. On Nov. 19, 2014, Brady provided his vision for Medicare reform when he unveiled a discussion draft titled “Hospital Improvements for Payment Act of 2014.”

The question that many interested stakeholders will presumably ask is: “Will the Hospital Improvements for Payment (HIP) Act of 2014 become law?” The answer, which may disappoint some, is largely irrelevant. The fact of the matter is that the HIP discussion draft may eventually become law in some form, or maybe it will bog down in committee and never see the light of day again.

However, Brady’s discussion draft comes at a very important time, because it serves as a catalyst for stakeholder examination into what the future of Medicare might look like for the hospital community. Medicare reform is inevitable, but hospitals, providers, and other stakeholders must engage in a necessary debate to help shape that reform. A Ways and Means Committee press release, issued the same day as the HIP discussion, contained a request from Brady “that all stakeholders provide comment and add their voices to the legislative process.” There are a number of ways to interpret the HIP discussion draft, but it might be most instructive to view it as an invitation to join the debate in real time.

At 146 pages in length, the HIP discussion draft will not leave anyone short on discussion material. The draft addresses a wide range of issues such as payment methodology and includes proposals for a short inpatient stay methodology, oversight and improvements to the Recovery Auditor (RAC) program, as well as changes to the Medicare appeals process. The discussion draft is made up of two titles; Title I outlines solutions to the issues previously outlined, while Title II includes 19 policies relating to hospital reform offered up by additional members of the Ways and Means Committee. While a thorough read of the entire document is highly encouraged, for our purposes, we will take a look at Brady’s proposal as it relates to RAC audits and improvements to the RAC program. 

The HIP discussion draft hammers away at the RAC program early and often. In Section 101, there is a proposal to extend the RAC audit moratorium (which currently runs through March 31, 2015) an additional six months, through Sept. 30, 2015. That proposed six-month extension is just the beginning, however, as the discussion draft also proposes a further extension of the RAC audit moratorium (which would limit RACs from conducting audits with respect to inpatient short-term hospital discharges occurring during fiscal years 2016 through 2019). 

Next, Sections 104 and 105 outline additional proposed changes to the RAC program. Section 104 leveraged findings from a May 20, 2014 hearing held by the Subcommittee on Health of the House Ways and Means Committee to propose the development of a higher degree of monitoring and oversight for the RAC program. This section calls for the establishment of a RAC Compare Website that would contain detailed information for each RAC region. Information shared on the website would include the total number of processed claims, the total number paid, the number denied by the RAC, and the total number of denied claims overturned on appeal by an administrative law judge or departmental appeals board. 

Section 105 proposes a number of additional improvements to the RAC program. These proposed improvements include limiting the RAC program lookback period to a maximum of three years for audit and recovery activities. In cases in which a claim is denied in full or in part, a proposed improvement allows the provider a 30-day discussion period prior to the RAC transmitting the claim to a Medicare Administrative Contractor (MAC) for adjustment or recoupment, and this provision would require RACs to confirm that a discussion request has been made within three business days of the request.

There is also a proposal to establish limits for additional documentation requests (ADRs), which will be adjusted in accordance with a provider’s denial rate under a proposal in the draft. Therefore, providers with low denial rates will have lower limits, whereas providers with high denial rates will have higher limits.

Finally, in an effort to prevent duplicative audits, RACs and all other entities performing pre-payment and post-payment audits will be required to submit a record of such reviews to the recovery audit data warehouse.

The RAC program improvements proposed here are just the tip of the iceberg. The HIP discussion draft also addresses payment methodologies, inpatient stays, outpatient stays, short stays, the fledgling Medicare appeals system, and quality and transparency. After reviewing the HIP discussion draft in its entirety, hospitals, providers, and stakeholders should consider which proposals they support or do not support, which go too far or do not go far enough, which could be readily implemented and which could cause some potential operational difficulties. Understanding how changes to key components of the Medicare program can affect hospitals, providers, and beneficiaries is of the utmost importance.

The next step is effectively communicating your message to the proper channels. Congressman Brady ignited the debate, and now is the time to join the discussion. 

About the Author

Steven Greenspan serves as Vice President of Regulatory Affairs at Executive Health Resources (EHR) and is responsible for overseeing EHR’s regulatory research and hospital advocacy efforts, and collaborates closely with the EHR’s appeals management teams to offer support on complex Medicare, Medicaid, and Commercial Appeals matters.

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