Inside Health Policy: Graves, Schiff Reintroduce Legislation To Reform Recovery Auditors

Graves, Schiff Reintroduce Legislation To Reform Recovery Auditors

Posted: May 06, 2015

Reps. Sam Graves (R-MO) and Adam Schiff (D-CA) reintroduced legislation to reform CMS’ policies surrounding Recovery Auditors, much to the delight of the American Hospital Association, which released a report Friday (May 1) detailing its allegations that the auditors’ practices are harming hospitals.

The latest version of the Medicare Audit Improvement Act would eliminate the RACs’ contingency fee structure about which hospitals have long complained, a policy not included in the 2013 version of the bill. Also included in the latest version are policies to lower RAC payments for poor performance due to high rates of incorrect denials, and to establish a transparent method to calculate a RAC’s appeals overturn rate, according to a fact sheet from Graves’ office. Unlike the 2013 version, the latest version also requires RACs to make inpatient claims review decisions using the same information doctors had when treating the patient. However, RACs have not reviewed hospital inpatient claims for whether an admission was appropriate since the two-midnights policy began in October 2013.

Policies in the 2013 version of the bill that were dropped from the latest version include provisions:establishing a consolidated limit for medical records requests; implementing financial penalties based on complying with certain program requirements; requiring RACs to cover the cost of providers’ appeals if the providers win; focusing medical necessity audits on frequent payment errors identified by CMS; establishing consistent criteria for pre-payment audits; requiring CMS to make certain data on RAC performance public; requiring that a Medicare contract-employed physician validate whether denials made by non-physicians are warranted; and providing hospitals with due process appeals rights when CMS reopens or revises a claim determination.

Both versions of the bill would eliminate the one-year timely filing limit for rebilling denied Part A claims under Part B.

“My bill would put in place common-sense reforms that maintain appropriate oversight over billing problems without an open-ended invitation to bombard hospitals with costly and needless audits. Our rural hospitals are particularly ill-equipped to handle this abuse of the audit system,” Graves said in a statement.

The AHA report says hospitals have reported an average of $1.4 million per hospital in claims under appeal, and that hospitals hire or reassign the equivalent of 2.2 employees to handle RAC audit requests and the backlogged appeals process. The bill would make long-overdue repairs to the RACs, according to AHA Executive Vice President Rick Pollack.

But the Council for Medicare Integrity, which represents RACs, raised concerns with the bill. “Instead of legislative initiatives designed to weaken Medicare oversight, it would be more constructive to see proposals from the hospital industry and its advocates that address the alarming problem of improper Medicare billing, which drained more than $60 billion in improper payments from the Trust Fund in 2014 alone,” the group said. — Michelle M. Stein

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