RAC Reform Movement Gains Some Traction

Joe Cantlupe, for HealthLeaders Media , March 28, 2013

CMS Changes Course, Slightly
The medical center's costly investment in people and technology was due to CMS nonsense, Lawrence Hughes, JD, assistant general counsel for the AHA, told me. Ultimately, CMS agreed that it had not only violated policy—but the law, Hughes said.

As a result, the government has announced that it will change its policy of denying reimbursements to hospitals that provide medically necessary care, even when it is later determined by auditors to have been delivered inappropriately in an outpatient setting.

CMS's changed position is due, in part, to the AHA's lawsuit, which referred to Munson's situation and similar experiences at three other hospital systems.

The CMS interim rule (PDF) reflects the agency's revised position and is seen as a major victory for hospitals, which had claimed that the existing rule prevented them from collecting hundreds of millions of dollars in reimbursements. The suit is continuing, however. "We are in the process of filing an amended complaint," noted Hughes, who declined to detail what the complaint will claim.

Audits are Lucrative
So the government is making a tiny effort on RAC audits, but apparently it's too lucrative for the government to make wholesale changes, for now. Obviously, the RAC audits mean hefty returns for the government, despite the unevenness of enforcement.

The U.S. Government Accountability Office has estimated that $32.7 billion a year in improper Medicaid payments are made, with the federal share accounting for $18.6 billion and states' improper payments set at $14.1 billion. The government probably will continue to be aggressive in its use of RACs, says Jon Elion, MD, a cardiologist at The Miriam Hospital in Providence, RI. The Medicare program may amount to $2 billion per year, he says.

"The Medicaid RACs do include contingency fees, and for that reason, folks predict that the Medicaid RAC auditors will be more aggressive," says Elion, who also is founder and CEO of ChartWise Medical Systems, which offers a comprehensive system to support clinical documentation improvement, and is an expert in RAC audits.

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