Criticism of the RAC (recovery audit contractor) program is becoming a national pastime. Needless to say, hospitals hated the program from the very beginning. And little wonder. The program pays private contractors a percentage of everything they recover through Medicare audits. Critics say that’s like giving a state trooper a cut of every traffic fine. Actually, though, it’s worse. It’s like giving the cut to a private contractor rather than to a trooper.
And that was before the program even started. Once the audits began, other problems cropped up. For example, there is the rate of errors by the auditors, as revealed through appeal outcomes. The American Hospital Association reports that its members have been successful a jaw-dropping 72% of the time in challenging RAC inpatient audits, with some hospitals scoring over 95%.
Then there are the delays. This January HHS had to suspend all appeals for two years due to a backlog of 375,000.
At the American Health Lawyers Annual Meeting last week a Senate Finance Committee lawyer speculated that the RAC program may be at the tipping point. And it’s not just because of grassroots criticism. The government is joining in the attacks. The GAO is expected any day to release a report elaborating on the program’s failings.
And yesterday the Senate Special Committee on Aging released a report indicating that the program is failing in its basic goal of reducing improper Medicare payments. The evidence? Improper payments increased by $50 billion over the past year, while the number of RAC auditors continued to climb.
Critics charge that the very theory behind the program is flawed because RAC auditors are paid to find errors rather than to prevent them. In fact, they only get paid if errors continue to occur.