Take the slow track on RAC program

It will take an act of Congress to keep yet another set of eyes from poring over medical records for billing errors when physicians file Medicare claims. And Congress has good reason to act.

Numerous audits already are in place to identify and collect Medicare overpayments. But beginning as early as this month, the Centers for Medicare & Medicaid Services -- by Congressional mandate -- will start hiring outside auditors to look into claims by physicians, hospitals and others through yet another postpayment review. It's redundant, but CMS plans to have recovery audit contractors, commonly known as RACs, in all 50 states by January 2010.

It's now up to Congress to pass a pending bill that would put a one-year moratorium on the program. Lawmakers can then determine what comprehensive changes are needed or if the entire program should be deep-sixed.

Inpatient hospitals, not physicians, likely will be the more productive target for auditors paid based on the number of overpayments and underpayments they uncover. A recent CMS report about a three-year RAC pilot program that ended in March showed that only about $20 million of the roughly $990 million in overpayments identified came from doctors.

But that's little consolation for doctors who find themselves asked to justify their billing. California, Florida and New York doctors are already familiar with the hassles, based on their experiences with the pilot. One California urologist said he received a demand for patient medical records so the company could determine whether he charged too much for office-administered drugs more than four years earlier. Such demands for years-old medical records are not uncommon.

And beyond the time-consuming and costly burden of filling those requests, physicians who want to challenge RAC accusations also must take time and resources away from their patients to gather physician orders, progress notes and other documentation often housed in other facilities.

In a letter to Rep. Lois Capps (D, Calif.), who has sponsored a bill that would impose the one-year moratorium, American Medical Association Executive Vice President Michael D. Maves, MD, MBA, said the RAC program "has been an enormous burden on the affected physicians and has failed to further the worthy goal of eradicating frequent billing mistakes." The AMA believes Medicare overpayments and underpayments could be resolved more effectively through outreach and education.

The AMA has pushed for and received numerous changes in the event a permanent RAC program launches: A promise that CMS will establish limits on the number of medical records an RAC can request. A requirement that RACs have a medical director and coding experts. Requirements that reviewers' credentials must be provided upon request, and that RACs can only evaluate claims filed after Oct. 1, 2007, and no more than three years old. Previously, there was no limit on how far RACs could dig back through claims.

In addition, companies that were once paid based on how many overpayments they recovered also will now be financially rewarded for discovering underpayments to physicians, hospitals and others. That was a change made partway through the demonstration.

While those are improvements, far more needs to be done. For starters, RACs are still paid on a contingency basis, a "bounty hunter" system that needs to go away. The AMA also believes it is critical for CMS to work to educate physicians on where billing errors lie. Without education, physicians will continue to be audited. The AMA, too, wants to see CMS raise the minimum claim amount that can trigger an audit. Right now a $10 claim can be audited. The Association wants that minimum to be at least $25.

Among other improvements the AMA is calling for, and which CMS could accomplish administratively: That RACs pay physicians' costs for copying medical records, a courtesy hospitals already receive. That RACs use physician reviewers of the same specialty and licensed in the same state as a physician being audited. And that physicians be shielded from audits springing from differences in coding interpretations.

Physicians already encounter enough administrative hassles in the Medicare program. It's time for Congress to place the one-year moratorium on the RAC program and prevent another burden from being placed on doctors' already-strained backs.