By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    What Are the Benefits of CBD?
    November 27, 2021
    How to Measure Adult Diapers- The Ultimate Guide to Picking the Right Size
    March 8, 2022
    medicine cabinet
    The Effect Of Finished Dosage Form Manufacturing In New Drugs
    July 5, 2022
    Latest News
    Beyond Nutrition: Everyday Foods That Support Whole-Body Health
    June 15, 2025
    The Wide-Ranging Benefits of Magnesium Supplements
    June 11, 2025
    The Best Home Remedies for Migraines
    June 5, 2025
    The Hidden Impact Of Stress On Your Body’s Alignment And Balance
    May 22, 2025
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    Medical Negligence
    The Impact of Medical Negligence: How Claims Can Help You Move Forward
    January 6, 2025
    Advancing Your Healthcare Career through Education and Specialization
    April 16, 2025
    PPACA: “It’s in there!”
    September 9, 2017
    Latest News
    Let Your Lawyer Handle the Work Before You Pay Medical Costs
    July 6, 2025
    Top HIPAA-Compliant Messaging Apps for Healthcare Teams
    June 25, 2025
    When Healthcare Ends, the Legal Process Begins: What Families Should Know About Probate and Medical Estates
    June 20, 2025
    Preventing Contamination In Healthcare Facilities Starts With Hygiene
    June 15, 2025
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: Is it Time to Rein in the RACs?
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Business > Finance > Is it Time to Rein in the RACs?
BusinessFinanceHealth ReformHospital AdministrationPolicy & Law

Is it Time to Rein in the RACs?

Andy Salmen
Andy Salmen
Share
0 Min Read
SHARE
recovery audit

The governmental Recovery Audit (RA) recovery audit

The governmental Recovery Audit (RA) program was designed to monitor Medicare payments and to identify those that were improper, either due to over payment or underpayment. Measures are taken to recoup over payments.  The program is also supposed to provide for remedial actions that can be implemented in order to prevent the same medical billing management mistakes from happening again in the future.

Although the medical billing management ideals of the program are sound, according to the Office of Medicare Hearings and Appeals (OMHA) there are currently almost 357,000 appeals pending involving both providers and beneficiaries.  Administrative law judges capable of handling 2,000 appeals a week are being sent 15,000 instead.

The major problem with the program is that the Recovery Audit Contractors (RACs) receive a percentage of the funds they recover from over payments.  This gives them an incentive to find errors in the audits even when none exist.  In a letter to (now former) Health and Human Services (HHS) Secretary Kathleen Sebelius, Rep. James McDermott, proposed some suggestions for administrative changes that can be made without the necessity of congressional intervention.  The main categories for reform McDermott suggests include:

1. Moving beneficiary appeals to the front of the line

As McDermott notes, hospitals and other providers may be able to absorb the losses they suffer during the more than two years it takes to resolve the appeal.  This is often not the case with beneficiaries who are on fixed incomes and suffer greatly throughout the lengthy appeals process. More than two-thirds of the denial of claims by the RACs are overturned on appeal.  The process must be sped up and beneficiary appeals moved to the front of the line.

2. Modification of the way the RAC program works.

Since the cause of the backlog of appeals has been identified as due to some actions on the part of the RACs, McDermott made some specific suggestions for changes to the program.

  • Modify the “two midnight” rule that deals with approval or denial of the amount of time a patient is authorized to spend in the hospital. It should be replaced by more “concrete admission standards.”
  • Make RACs accountable by imposing a financial penalty when their collection decision is overturned on appeal.  Currently, RACs receive a 9% to 12% commission on all the funds they recover when they make a finding that a provider has been overpaid.  The providers are winning their appeals by large margins indicating the incentives are not working as they were designed to work, but instead are inspiring RACs to find nonexistent billing errors.
  • Limit the authority of RACs to deny related claims.  
  • Establish performance standards for the RACs.

3. Continue the “pause” on document requests until a plan is firmly in place that addresses the current problems.

During the fourth quarter of 2013, providers spent from $10,000 to more than $100,000 responding to RAC requests.  Currently, it takes approximately 28 months for an appeal to be heard.  There should also be a limit on how far back RACs can review claims that are submitted during the pause.

4. Evaluate the impact of Change Request (CR) 8435.

This allows RACs to automatically deny a claim related to one under appeal.  McDermott is concerned about the impact of this new authority on the existing backlog of appeals.

If the suggested changes are not made, providers may suffer such serious losses that they are unable to even continue in the business. Another option is that they may refuse to accept patients whose only source of payment is Medicare. 

Image provided by Tactical Management

TAGGED:RAC
Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

car accident lawsuit
Let Your Lawyer Handle the Work Before You Pay Medical Costs
Policy & Law
July 6, 2025
women dental care
What Is a Smile Makeover and How Much Does It Cost?
Dental health
June 30, 2025
HIPAA-Compliant Messaging Apps
Top HIPAA-Compliant Messaging Apps for Healthcare Teams
Global Healthcare Policy & Law Technology
June 25, 2025
recovering from injury
Rebuilding After Injury: Path to Physical and Emotional Recovery
News
June 22, 2025

You Might also Like

Lawmakers Finally Asking About Medicare Contractor Conflict of Interests

March 1, 2011

The Medical Conspiracy of Silence

February 25, 2012
Business

Navigating The Changing Landscape Of The Medical Marijuana Industry

September 14, 2019
BusinesseHealthPolicy & Law

7 Healthcare Cybersecurity Tips To Protect Your Data

November 9, 2018
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?