Sept. 4—Medicare auditors are more accurate than hospital advocates have maintained and their findings are rarely appealed, according to a government watchdog.

The Office of Inspector General (OIG) reported this week that in 2010 and 2011 providers appealed only 6 percent of the 1.1 million claims in which recovery audit contractors (RACs) found that they overbilled Medicare. And only 44 percent of those appeals resulted in overturning the audit findings.

The $1.3 billion in total recoveries the OIG found in those years was slightly more than the $1.03 billion the Centers for Medicare & Medicaid Services previously reported to Congress. Eighty-eight percent of the Medicare payment recoveries or underpayments identified by RACs were for inpatient hospitals, the OIG found.

The appeals findings were a departure from data compiled through the American Hospital Association’s (AHA) survey of 2,300 hospitals, which has found that hospitals appeal about 41 percent of all Medicare claims denied by a RAC. Additionally, the AHA survey concluded hospitals were successful in overturning 72 percent of challenged RAC denials.

The RAC Analyses: Taking a Closer Look

The difference in RAC appeals data stems from the fact that the OIG report is based on 2010-2011 data, while AHA’s “RACTrac” data were gathered through 2013, said Marie Watteau, a spokeswoman for AHA.

“Treatment decisions are based on complex medical judgments that take into consideration many factors; however, RACs are often second-guessing the medical judgment of treating physicians by evaluating the decision in hindsight based on the entire medical record rather than the information that was known by the physician at the time of treatment,” Watteau said in a written statement.

Watteau also highlighted the Government Accountability Office’s recent recommendation that CMS increase the consistency of review requirements across auditors to improve the efficiency and effectiveness of the audit process and simplify compliance for providers.

“Hospitals are drowning in the deluge of unmanageable medical record requests and inappropriate payment denials and the appeals system is severely overburdened due to inappropriate RAC denials,” Watteau said. “CMS and Congress need to make the audit processes more fair and transparent.”

Hospital advocates have urged passage of the Medicare Audit Improvement Act, which would establish a limit on medical record requests, impose financial penalties on RACs that fail to comply with program requirements, and require the public release of RAC performance evaluations.

At a July 25 Senate Finance Committee hearing, J.J. Carmody, director of reimbursement at Billings Clinic, and Suzie Draper, vice president of business ethics and compliance at Intermountain Healthcare, said their organizations were successful in obtaining reversals of RAC payment denials. But such efforts required significant financial and staff resources, they said.

In contrast, the average recovered overpayment amount in 2010 and 2011 was $507, according to OIG.

The OIG also found that most common reasons behind RAC recoveries from 292,000 providers in the two years it reviewed were for medical services delivered in inappropriate facilities (32 percent) and for billing incorrect codes on Medicare claims (25 percent).

Publication Date: Wednesday, September 04, 2013