No, RAC audits do not impact patient care

Many myths are tough to dispel because they are so often repeated. No, cold weather does not give you the cold or flu.

A shark cannot smell a single drop of blood from miles away. Chewing gum does not stay in your stomach for seven years. And, be careful because lightning can, in fact, strike the same place twice.

Despite being thoroughly debunked; some still believe myths like these are true. The same goes for myths about Medicare Recovery Audit Contractors (RACs), who review a small percentage of fee-for-service claims on a post-payment basis to ensure they were billed correctly according to program rules.

Unfortunately, in an effort to further an anti-oversight agenda, the hospital lobby continues to champion a far-fetched falsehood. They repeat over and over that recovery auditors negatively impact the care provided to a Medicare beneficiary. Fortunately, repeating a falsehood over and over doesn’t make it true and those who understand how the RAC Program works know it’s not possible.

First, RACs review a very small subset of claims up to 6 months after care was provided to the patient. The Centers for Medicare & Medicaid Services (CMS) selects certain error prone claim types to be reviewed for billing accuracy after the care was provided and also after the provider is compensated for their work. So, a RAC audit cannot directly impact the care a patient receives.

Second, hospitals falsely claim recovery auditors consistently challenge legitimate services provided to patients. Recovery auditors are tasked to focus on identifying billing issues – duplicate billing, coding mistakes, claims submitted without the proper documentation. RACs have not reviewed for medical necessity since 2013 – four years ago. CMS has since tapped the Quality Improvement Organizations (QIOs) to review inpatient claims for medical necessity concerns.

Third, RACs do not outright deny any claim. When a submitted claim is questioned by the auditor, the provider receives a letter outlining the concern with the claim. The provider is then availed of a 30-day “discussion period” where they can speak with the auditor about the claim, make any needed corrections or submit any missing documentation. If concerns about the claim can be addressed, it’s approved and the review is over.

Interestingly, according to CMS’s Comprehensive Error Rate Testing (CERT) Program, the most significant Medicare billing error category are claims submitted without the necessary documentation required by CMS – 65 percent of all Medicare billing errors. Another 10 percent come from claims billed to the wrong service code that often cause the provider to be compensated either too much or too little. As a result, billions of dollars in improper payments leave the program in error each year due to these paperwork mistakes.

The reality is that providers are human and humans make mistakes. Billing and documentation errors are going to happen. The problem is that billing errors are taking place on such a large scale – to the tune of more than $41 billion lost each year – and at a time when Medicare Part A will soon be reducing coverage to just 88 percent of what’s covered today, due to a lack of funding.

Meanwhile, myths and misperceptions have done great damage to Medicare solvency. Misplaced provider concerns have caused the RAC program to be scaled back so greatly that currently 99.5 percent of Medicare claims are paid without anyone reviewing the claims after they’ve been paid. Recovery auditors can review a mere 26 billing issue areas (down from 800 issues previously). Within that, auditors can only review 0.5 percent of claims within those specific Medicare claim types. Name an industry that would ever tolerate such a low level of oversight?

One way to continue robust Medicare oversight while at the same time reducing the fears of providers is to institute a permanent Medicare RAC prepayment review program. During the successful RAC prepayment demonstration project testing this auditing paradigm, RACs completed review of claims within 30 days of receiving the documentation. As a result, claims were reviewed and providers were correctly paid in a very timely manner right from the start – reducing improper payments, steering clear of any impact on patients and ensuring providers are not inconvenienced. In fact, the GAO has repeatedly recommended that Congress provide authority for CMS to reinitiate RAC prepayment reviews.

Provider lobbying groups celebrate the new constraints placed on Medicare oversight efforts, however billions of taxpayers will pay the ultimate price as less oversight will directly prevent Americans from enjoying the same level of health coverage their parents and grandparents received from Medicare when it’s their time to enroll in the program.

A financially healthy Medicare program benefits both patients and providers. And the truth is financial oversight is the most basically required function of any successful business. Instead of curbing Medicare billing oversight, a move to a new paradigm – prepayment auditing – is the best solution benefitting both the financial health of the Medicare Trust Fund and all stakeholders involved.

For the full article in Becker’s Hospital Review, click here.

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