AMA calls for overhaul of recovery audit process

Dec. 3, 2014

In a letter to the Centers for Medicare and Medicaid Services (CMS) today, the American Medical Association (AMA) provided recommendations for overhauling the flawed Recovery Audit Contractor (RAC) program and rectifying the current backlog of appeals.

The RAC program, which enlists private contractors to identify and correct improper Medicare payments, has caused a two-year appeals backlog due in large part to poor accuracy and overzealous denials, which has led to more than 60 percent of appeals being upheld and the contractors’ errors overturned in 2013.

“The AMA does not support improper billing, but the RAC auditors are often wrong and their bounty-hunter like tactics have caused physician practices undue hardship and expense,” said AMA President Robert M. Wah, MD. “As CMS awards new contracts in the RAC program, it must consider putting an end to policies that cause burdens for physicians and encourage RAC auditors to incorrectly deny claims.”

RAC auditors are paid a sizeable commission for denied claims and, although they are forced to return their contingency fee if a claim is overturned on appeal, there are no repercussions for inaccuracies so there is little incentive for RACs to limit their audits. As a result, the number of inaccurate audits, inappropriate claims denials and appeals continue to grow, with a 506 percent increase in appealed claims between 2012 and 2013, causing a significant backlog.

The appeals process is just one more burden facing physicians who are already struggling to meet a number of regulatory requirements. “Filing an appeal takes time away from patient care and often costs physicians more money than they recoup when a denial is overturned. It also causes uncertainty that can affect a physician’s ability to improve the quality of care and implement innovative new delivery models” said Dr. Wah

In order to fix the broken RAC program the AMA recommends that:

  • RAC contractors should be subject to financial penalties for inaccurate audit findings.
  • RAC audits of physicians should be performed by a physician of the same specialty or subspecialty licensed in the same jurisdiction.
  • Physicians should be able to rebill for recouped claims for a year following recoupment.
  • CMS should provide an optional appeals settlement to physicians similar to that provided to hospitals for short-term care.
  • CMS should retain the current medical record request limits and allow medical record reimbursement for physicians.

The AMA is dedicated to improving physician satisfaction and supporting practice sustainability and advocating for an overhaul of the RAC program is a part of that. As we work to shape a better health care system for all Americans, we are committed to supporting policies at every level of government that improve patient health, enhance access to affordable, quality care and that protect the privacy and trusted interactions patients have with physicians.

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