House Committee Hears Testimony on Recovery Audit Contractor Program

On May 14, 2008, the House Small Business Committee's Subcommittee on Regulations, Health Care and Trade held a hearing on "The Impact of CMS Regulations and Programs on Small Health Care Providers." 

During the hearing, the Subcommittee entertained testimony on the Medicare recovery audit contractor (RAC) program from the Centers for Medicare & Medicaid Services (CMS), American Medical Association (AMA), American Academy of Family Physicians, and The Alliance of Specialty Medicine. 

In testimony, CMS pointed out the apparent cost-effectiveness of the RAC demonstration. CMS also highlighted some of the improvements made to the permanent RAC program (e.g., requiring medical directors and certified coders) based on the feedback and experience during the RAC demonstration. 

CMS testimony also indicates that CMS intends to place a much greater emphasis on provider education and training in the permanent RAC program and require permanent RACs to identify and publish vulnerability analyses so that providers can make corrections before audits begin. Further, CMS reports that once the permanent RACs are selected, CMS and the RACs intend to conduct extensive provider outreach. According to testimony, CMS "hopes to have selections of the national RAC contractors made later this spring so that claim review can begin this calendar year."

In testimony before the Subcommittee, the AMA stated that it "believes that the RAC program is seriously flawed" and expressed its support for the Medicare Recovery Audit Contractor Program Moratorium Act (H.R.4105), which would impose a one-year moratorium on the RAC program so that policymakers can reevaluate the program.  The AMA also expressed some comments and suggestions regarding the RAC program. In brief, those comments and suggestions included the following:

• RACs should not be permitted to review claims from the previous 12 months
• Evaluation & Management services are not appropriate for RAC review
• Medical necessity determinations should be removed from the RACs purview
• Minimum claim amount should be $25 (rather than $10)
• Physicians should be reimbursed for copying expenses
• RACs should be required to respond to written physician inquiries within 15 days (rather than 30 days) and physician phone inquiries within 48 hours
• CMS should clarify the appeals process under the RAC program and apply the limitation on recoupment under the Medicare Prescription Drug, Improvement and Modernization Act of 2003
• Services omitted from claims should be treated as underpayments and RACs should accept case files from providers for underpayment case review

Comments

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