The Centers for Medicare and Medicaid Services (CMS) recently released a request for information that provides a blueprint for the proposed expansion of the oft-contentious recovery audit contract program. Under the plan, the recovery auditors would expand audits of Medicare Advantage Plans to monitor the insurers that may try to sneak in higher payments.
The current RAC program has been underway for nearly five years and utilizes the services of private companies — known as recovery audit contractors, or RACs — to audit medical records at hospitals and doctor offices to look for instances where Medicare is paying too much money. For every overpayment discovered by a RAC auditor, the company receives a percentage in return of the overpayment.
According to Modern Healthcare, "providers have characterized RACs as administrative burdens and argued auditors have clear incentives to hunt for overpayments even when they may not exist."
As the proposed expansion becomes more of a reality, the likelihood is the provider complaints will become the complaints of the Medicare insurers where the two sides may join in uncharacteristic unity against a much larger force. For those providers who have been audited and who have improperly billed Medicare, they have to forfeit thousands to millions of dollars back to Medicare. The same would be true for insurers who are audited and are found to have overbilled Medicare.
The mission of the current RAC program is to identify and correct improper Medicare payments through the efficient detection and collection of overpayments made on claims of healthcare services provided to Medicare beneficiaries, and the identification of underpayments to providers so CMS can implement actions that will prevent future improper payments in all 50 states.
So far, recovery auditors have returned more than $5.4 billion to Medicare in "improper payments." Yet hospitals and providers argue they are struggling to manage the program because of its perceived inefficiencies — in part because much of it remains manual and paper-based. As such, the program receives constant attention and legislative oversight. CMS says the program ensures taxpayer money is being spent appropriately.
The Affordable Care Act required Medicare's RAC program to expand Medicare Advantage and Part D plans, but it hasn't happened yet. The CMS RFI explains how that would be done, but there is no timeline for when the program would go into effect.
Modern Healthcare reports that the new Medicare Advantage auditing system requires that RACs would be "tasked with conducting risk adjustment data validation (RADV) reviews. Each Medicare Advantage insurer is paid a monthly amount from the CMS for every member it covers, and those payments are based on risk-adjusted scores. If a member is sicker and has more medical needs, the risk score is higher, and the insurer is paid more money. RADV audits look at a sample of medical records to determine if an insurance company's diagnoses for risk scores are legitimate and worthy of the higher payments."
Like the current RAC program, CMS will pay a contingency fee to each RAC. Current Medicare RACs earn anywhere from 9 percent to 12.5 percent of recouped overpayments on average. Like providers, insurers would be able to appeal RAC decisions. Comments on the RAC program are due by Feb. 1.
