WASHINGTON, D.C. – The federal Recovery Auditor (RAC) program might not be broken, but it isn’t working entirely as intended, according to testimony delivered late last month during a U.S. Senate Finance Committee hearing.

Far more needs to be done in terms of “striking the right balance between conducting appropriate program integrity oversight of the Medicare program and ensuring there’s not an undue administrative burden on healthcare providers,” in the words of U.S. Sen. Orrin Hatch, R-Utah, a ranking committee member and one of two senators who presided over the hearing (the other was committee chairman and Sen. Max Baucus, D-Mont. ).

“We’ve got to find a way of getting healthcare so that the government can live with it and the people who give healthcare can live with it,” Hatch said in a brief summation. “We don’t need to have doctors second-guessed on everything that they do, especially when they have good results. I’m very concerned about it.”

Witnesses delivering testimony during the hearing were two healthcare professionals from the senators’ home states – Suzie Draper, vice president of business ethics and compliance at Intermountain Healthcare in Salt Lake City, and J.J. Carmody, director of reimbursement at the Billings Clinic in Billings, Mont.  – plus Robert Rolf, vice president of CGI, the Medicare RAC for Region B.

A pivotal moment came when Hatch asked all three witnesses what could be done, both by Congress and the Centers for Medicare & Medicaid Services (CMS), in order to improve the ways in which the RACs conduct their business of auditing providers and reclaiming overpayments.

“It is very difficult for us to even tell why the records are being requested (by RACs),” Carmody said, noting that “more of a clear effort to tell us what they are looking at when they send the (record request) letters … would be very helpful.”

Carmody even suggested that federal officials examine the possibility of eliminating the “observation status” tag from the federal healthcare lexicon, though she admitted, “that’s a big one” in the way of proposed changes. Rolf, noting that CGI participates in monthly informational sessions with its providers, simply said that “transparency, education and communication” between CMS, RACs and provider groups must become and remain a top priority.

“No one enjoys being audited,” he said, “but we can reduce the administrative burden through communication.”

What remains to be seen is whether the hearing will have any tangible outcomes. Yet Hatch and Baucus made clear in twin statements that the issue of RAC oversight needs addressing, in one way or another – the former senator used the big picture to make his point, while the latter used an anecdote.

Hatch made it clear that while he is advocating for reform, he still recognizes why the RACs aren’t going anywhere anytime soon – of Medicare’s $550 billion price tag in 2012, he noted that $45 billion was found to have been spent improperly, adding up to an alarming sum of eight cents on every dollar.

 “That rate is unacceptable, especially given the recent Medicare Trustees Report which said that the Medicare trust fund could be depleted by as early as 2022,” Hatch wrote in his statement. “Reducing the amount of improper payments is imperative to extending the financial longevity of the Medicare trust fund and to ensuring that Medicare continues serving patients for years to come.”

The RACs reclaimed overpayments amounting to just $75 million in 2010, but expanded that sum to $2.3 billion in 2012, Hatch added.

“Clearly, these are positive steps, but we are still a long way from eliminating even half of the estimated $44 billion in improper Medicare payments,” he wrote. “(And) now, RACs must a walk a fine line between chasing down every last dollar and putting an unnecessary burden on our nation’s caregivers. Even though RACs have reviewed less than 1 percent of claims nationwide, their efforts can be burdensome to providers caring for sick patients. No one goes into the healthcare business to respond to auditors’ requests for dozens of documents.”

Hatch also noted that he supports reducing the RAC lookback period to three years, installing stricter limits on the number of medical records that can be requested at the same time, and accepting electronic copies of requested documents. The senator also expressed concern about the fact that more than 60 percent of appeals that made it to the administrative law judge (ALJ) level have been adjudicated in a fashion that was partially or fully favorable to the defendant provider.

“Such a high rate of reversals raises questions as to whether RACs are being too aggressive or do not understand current medical practice,” he said.

Baucus in his statement described a single case in which a 65-year-old Montana man underwent leg surgery, was fitted with a cast, and several weeks later returned to Kalispell Regional Medical Center’s emergency room with severe chest pain to receive treatment for what was diagnosed as a blood clot in his lung.

Despite the fact that the original surgery and cast increased the patient’s risk for a blood clot, a private contractor’s audit tagged the man’s second admission as unnecessary. Kalispell appealed, and won, as it has about 90 times since the permanent RAC program began.

“There must be better ways to spend the government’s and hospitals’ time and money,” Baucus wrote.

Specific ally, Baucus said he wants Medicare to incentivize private contractors to focus on the most at-risk services and providers; to bolster provider education, both by Medicare and its contractors; and to make the appeals process more efficient.

“One of my top rules to live by is, ‘do it right the first time,’” Baucus said in his statement.

Yet that goes even for members of Congress.

“We’re at fault, too,” he admitted in the hearing. “We could do a better job.”

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Mark Spivey is a national correspondent for the www.racmonitor.com and ICD10monitor.com websites.

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To view the committee hearing in its entirety, or to read the senators’ statements or summations of witness testimony, go online to http://www.finance.senate.gov/hearings/hearing/?id=7b79eddd-5056-a032-52de-e9f0d4ce8ed0.

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