Physician practices recount RAC program horror stories before panel
Provider organizations peppered a House small business committee during a Wednesday hearing with concerns about the Recovery Audit Contractor program.
Witnesses provided their views on the program at a hearing before the subcommittee on regulations, health care and trade of the House Small Business Committee.
The program, being ramped up by the Centers for Medicare & Medicaid Services, is intended to allow outside contractors to look for improper payments under the Medicare program.
The RAC program, mandated by Congress through the 2003 Medicare Modernization Act, employs contractors to analyze and audit provider reimbursement claims for billing errors. The pilot program, which began in 2005, will expand nationwide this year.
However, provider groups said the structure of the program will pose an onerous burden on providers and give investigating contractors too much latitude in looking for mistakes in payments.
"Approximately 75 percent of physician practices are composed of fewer than eight physicians. For the majority of these small physician practices, including mine, burdensome regulations can take valuable time away from patient care," said William A. Dolan, MD, a board member for the American Medical Association and a practicing orthopedic surgeon in Rochester, N.Y.
"We believe this is particularly true with regard to the Recovery Audit Contractor program," Dolan added. "The RAC program ... has been extremely burdensome on the affected physicians and does nothing to educate them about common billing mistakes. Instead, the program embraces 'bounty hunter' techniques that provide RACs with incentives to deny claims."
"Physician practices are small businesses, which have little capacity for dealing with arbitrary, ill-informed and often confusing policies of contractors who seem to have little interest in communicating clearly with physicians about what to expect and why," added Michael Schweitz, vice president of the Coalition of State Rheumatology Organizations.
Dolan said the AMA believes CMS should preclude RACs from reviewing claims from the previous 12 months because those claims are still being reviewed by carriers and fiscal intermediaries. In addition, he said, it should restrict RACs from reviewing issues from evaluation management services, limit the number of medical records RACs request from physicians and encourage them to pursue underpayments as well as overpayments.
In Florida, the RAC contractor did not follow policies and its demands resulted in extreme hardship for medical practices in the state, Schweitz testified. Medicare also notified secondary payers of overpayments, and these groups began contacting the practices to seek refunds as well.
Several providers related significant hardships related to their experience with RAC contractors. Karen Smith, MD, a sole practitioner in Raeford, N.C., told committee members that a slipshod RAC study of a sampling of her records, and a resulting extrapolation of those results, extracted a significant toll on her, and she eventually decided to drop appeals and repay more than $18,000, financed by borrowing from her home equity.
"The 'guilty until proven innocent' audit we endured used sampling and extrapolation calculations which are not properly verified for validity," she said. "In addition to the disruption to patient care and possible reputation damage by the surprise and abrupt visit of badge-bearing authorities, the process quickly exhausted our financial reserves."
"It defies common business sense to run a high-quality practice that utilizes electronic health records in a financial environment where Medicare does not recognize the true total costs for caring for individual patients with many medical problems," she added.
The RAC demonstration projects identified $1 billion in improper payments, said Timothy B. Hill, director of the office of financial management for CMS. However, most of those overpayments were made to hospitals, he said.
Hill said that when the RAC program is fully rolled out, contractors will be required to employ medical directors and certified coding experts.
"Under the permanent and nationwide RAC program, CMS will place a much greater emphasis on provider education and training as part of the RAC program," hel said. "For example, CMS will require RACs to seek CMS approval before beginning medical necessity reviews of provider claims. These reviews sometimes involve 'gray' areas of Medicare policy and CMS oversight will ensure that providers are not unduly burdened or second-guessed by the RACs. Additionally, CMS will require the permanent RACs to identify and publish vulnerability analyses so that the provider community can better understand where mistakes are being made so they can correct those errors before an audit would begin."
