RACs raise Qs
John Andrews, Contributing Editor
WASHINGTON, D.C. – As the recovery audit contracting program continues to lengthen its reach into the healthcare industry, providers are increasingly wondering if they will feel a pinch.
Developed by the Centers for Medicare & Medicaid Services as a way to ensure proper payments for Medicare services, the RAC initiative utilizes contractors to audit provider claims for validity. Yet the program has raised concerns about whether financial rewards offered for finding errors will lead to widespread misreporting and massive reimbursement losses for providers.
Lou Feuerstein, partner with Philadelphia-based consulting firm ParenteBeard says based on the RAC pilot program results, he expects auditors to be very busy.
"The pilot program was a tremendous success for the government because in the states where they tested it, just about every hospital paid back $1 million or more," he said. "The government absolutely believes that hospitals are getting overpaid whether it's intentional or not."
University of Pittsburgh Medical Center hasn't experienced any audit difficulties as of yet, but its Medicare region (A) hasn't been with the program very long, admits Thomas Newman, vice president of finance. Responsible for coordinating RAC preparedness across the 20-hospital health system, Newman acknowledges "there is certainly some concern" about how the auditing process will go.
"We're working with our vendor to install a product that tracks activity from RAC and other payer audits," he said. "To do that, we need a system that we can put across the organization that tracks by the type of audit, by the entity being audited and the issues the auditors are looking at so we can understand the financial impact and mitigate our risk going forward."
Based on initial reports of RAC audits, misreporting incidents have been limited so far, contends Irene Torino, managing director of regulatory risk and compliance practice for Chicago-based Huron Consulting Group's Wellspring Partners. Even so, she acknowledges that disputes with auditors "can fuel providers' fears that ultimate reimbursement is negatively impacted by some level of inaccurate determinations."
To date "a high percentage of RAC determinations" have been overturned in the provider's favor on appeal, Torino said, and "although it requires due diligence, time and effort, we encourage organizations to utilize the RAC appeals process when this occurs."
