RAC program causing concern

Hospital administrators are expressing frustration with Medicare’s Recovery Audit Contractor program, and many may not be prepared for the upcoming audits.

This became especially clear at the National Medicare RAC Summit in March, as provider representatives criticized the RACs charged with reviewing Medicare claims in search of overpayments.

Lynn Grieves, the chief compliance officer for MemorialCare Medical Centers in southern California, questioned the motives of the RACs.

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"The RACs are for-profit organizations," Grieves said. "They are going to do what they can to maximize their profits."

Administrators like Grieves don't think too highly of the four regional recovery audit contractors that will review provider claims, as RACs are paid based on the amount of overpayments they uncover.
Grieves, whose healthcare system participated in the Medicare RAC Demonstration Project, says RACs have an incentive to identify overpayments, even if they are questionable.

Stewart Pressler, vice president for patient financial resources at the Greater New York Hospital Association, said he was convinced that acute care hospitals would be the primary targets of Medicare RAC audits, as "that's where the money is."

Karen Feeley, director of network patient financial services at Manhattan's NewYork-Presbyterian Hospital, agreed, and speculated that physician practices might have less cause to worry than hospitals, given her experience in the demonstration project.

Hospitals will feel the pain of RAC, she said, especially if they lack an information technology platform linking RAC and provider.

"Paper is a nightmare," she said.

Feeley added that NewYork-Presbyterian struggled with inpatient coding issues, outpatient billing guidelines and unanswered questions from the Centers for Medicare & Medicaid Services.

Shannon McGee, director of patient financial services at Florida Hospital in Orlando, Fla., said her experiences will do little to ease the mind of a hospital CFO.

Florida Hospital had 7,672 claims audited between 2006-2008. More than 3,000 of those claims (39.5 percent) were denied by the RAC.

To make matters worse, McGee said, the RAC appeal process is lengthy and frustrating.

The Medicare RAC process will roll out nationwide beginning January 1, 2010.