RACs are a Racket

Under the Medicare Recovery Audit Contractor (RAC) program, the Contractors get paid a percentage of the” inappropriate” payments they identify and recover (in other words, a Medicare “bounty hunter” program).  The firms get to keep a portion of the improper payments that they find, with this contingency at 12.5 percent in fiscal 2010.

Recent data suggests that there is a very high rate at which the payments the RAC identifies as “inappropriate” are later deemed appropriate after further scrutiny.   This raises the question of whether the RACs are challenging too many payments and harassing providers. 

In order to try to “level the playing field” the Senior Democrat on the House Ways and Means Health Subcommittee has proposed that in the event a Medicare payment challenged by a RAC is later overturned under appeal, the RAC should be assessed a financial penalty.  Proponents of this proposal argue that this will cause the RACs to “think twice” before undertaking an audit to ensure that only truly inappropriate payments are being challenged.

Break Away from the Static

The proposal, put forward by Congressman Jim McDermott (D-WA), recommends that auditors that challenge Medicare billings face a penalty if the claims they flag turn out to be legitimate.  According to the American Hospital Association, nearly 75% of provider appeals of RAC findings filed in the 1st quarter of 2012 were overturned in favor of the provider. 

As always, ADVOCATE will keep you updated on this and all issues impacting radiology as they become available.

Best regards,
Kirk Reinitz, CPA