News Feature | August 23, 2013

RACs Labeled "Bounty Hunters" By One Healthcare Provider

Source: Health IT Outcomes
Greg Bengel

By Greg Bengel, contributing writer


In a presentation, one provider explains the RAC program and the stress it places on hospitals

In a presentation before the McAlester Regional Health Center Authority board in Oklahoma, Roger Jenkins of Milestone Healthcare described RACs as “bounty hunters,” and their auditing process as “highway robbery.” McAlester News-Capital quotes much of Jenkins testimony, in which he walks the board through the RACs’ auditing processes.

RACs are tasked by the government with eliminating fraud and recovering inappropriate Medicare payments. As such, they are paid on a contingency basis to look at previous Medicare A and B claims, and to recover money that has been paid to hospitals. Jenkins is one of many providers nationwide who bemoan RACs and their work. As previously reported, two providers testified in front of a Senate Finance Committee Hearing in June that the RAC program is hurting legitimate providers and eliminating payment for services that are often medically necessary.

According to Jenkins, RACs are supposed to be looking both at overpayments to hospitals as well as underpayments, or cases where hospitals should have been paid more for their services. Underpayments, he says, are rarely found. Instead, RACs seem to focus only on whether or not a service performed was medically necessary.

Jenkins details the stresses the RAC procedure causes, noting the first step is a data request from RAC compelling the hospital to send all of its records in for inspection. If RAC finds a problem, the hospital is then obligated to return the money that it has been paid until the dispute has been resolved. If the money is not submitted immediately, the hospital is charged interest. The hospital will get the money back at a lower interest rate later on, if RAC determines that the hospital did not bill Medicare inappropriately. Jenkins told the board that 60 percent of records inspected contained no overpayments, that three fourths of claims in which hospitals appealed the RAC decision are stuck in the appeals process, and that “Sometimes, it seems like you can’t win.”

Jenkins also added that he knows of several institutions that needed to close permanently after RAC audits. If a large number of cases from a particular hospital are disputed, the hospital sometimes returns so much money that it is unable to remain open.

Check out this article from The Hospitalist for more details on the RAC process and the strain it puts on providers. The article explains, for instance, that RACs keep a contingency percentage of the recovered Part A payment, earning up to 9 percent to 12.5 percent of the entire payment.