Senators Sympathetic to Medicare Audit Burden

At a Tuesday hearing at the Capitol, Senators on both sides of the aisle expressed understanding of the administrative burden that CMS audits place on hospitals. The Senate Finance Committee held the hearing on oversight and integrity of the Recovery Audit Contractor program that works with Medicare to audit provider reimbursement claims.

Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) both voiced that audits should be a balancing act between weeding out fraud and abuse, and creating an administrative headache. Baucus said that the committee will look at the program “seriously.” He said the “goal should be to lower the amount [of incorrect Medicare payments] to zero, but we can’t overburden legitimate providers who play by the rules.” According to CQ, Hatch also expressed concern. He noted that the RAC contractor is coming up for renewal in the near future, and that Medicare should use the renewal to ensure the right balance between protecting Medicare’s finances and avoiding undue administrative burdens on providers.

The RAC program was started as a six-state pilot program under the Medicare prescription drug law in 2003, and it was made permanent by Congress in 2006 after it found $1 billion in improper payments. The program was then expanded under the 2010 healthcare reform law, when Medicare managed care and Medicaid were placed under RAC contractors.

Audits found $29 billion in 2011 payments that were d

eemed to be “improper”, but there are many critics of the program. One representative of a large healthcare resource company testified at the hearing that the company has had to hire 22 full-time employees to handle all the documents requested by RAC. Other providers complain that RAC auditors use information obtained after the a patient is admitted to a hospital to determine that the admitted patient should have been treated as an outpatient.

Panelists all agreed that RAC audits could be improved with a redesigned appeals process, but that doing that alone would not make the process less time consuming. Committee Chairman Baucus recommended that Medicare should also give the contractors incentives to focus on the most “at-risk” providers, and that CMS should make existing regulations clearer.