Efforts to recover inappropriate Medicare reimbursements have even legitimate healthcare providers on edge, hospital officials told a Senate panel late last month. Excessively aggressive auditing practices cost hospitals time and money, and they may be harming patients, they warned.
Healthcare administrators testified before the Senate Finance Committee that Medicare’s Recovery Audit Contractors, or RACs, have caused more doctors to push patients out of the clinic for fear that auditors may later revoke reimbursements for in-patient care.
"RAC denials eliminate payment for medically necessary services rendered to patients simply because of a disagreement about the admission status," Billings Clinic reimbursement director Jennifer Carmody testified. "Fear of an inpatient denial" has prompted more physicians to push patients into "observation status" instead, she added.
RAC group CGI Federal Inc. maintained that it and other auditors "worked diligently to implement the program in an open and transparent fashion," and that they took steps to ensure that reviewers were not encouraged to "over-audit." Medicare’s RAC program recovered nearly half of a billion dollars in 2011, Kaiser Health News reported.
Finance Committee Chairman Max Baucus lauded the success of the program, but called for "balance" and efforts to ensure that the audits don’t "overburden legitimate providers who play by the rules."
Reimbursement audits and revoked payments can suck up hospital funds and staff time in dealing with appeals and gathering necessary paperwork, but they may also leave patients with a larger bill at the end of the day. Patients in "observation" may face higher co-pays and higher out-of-pocket drug costs, and they don’t qualify for nursing home care.
Carmody told the Senate panel that RAC audits and appeals cost Billings about 8,600 hours and $240,000 per year. Intermountain Healthcare’s business ethics and compliance vice president Suzie Draper added that her company hired 22 full-time workers just to manage the RAC program.
"Providers who have worked diligently to improve patient outcomes so that patients improve rapidly are essentially penalized for their efforts to improve patient care and shorten length of stay," Draper testified.
"Intermountain has had many hearings and received denials based on the outcome of a patient’s treatment, not on the original intent of the physician at the time of the admission," she said. "If a patient’s condition indicates to a physician that an inpatient admission is called for, but the patient subsequently improves more quickly than the original expected length of stay, the RAC will in hindsight determine that the physician’s original assessment was incorrect."