Rep. Jim McDermott (D-Wash.), a ranking member of the House Ways and Means Health Subcommittee, has written to HHS Secretary Kathleen Sebelius suggesting several changes to the Medicare recovery audit contractor program.
In the letter, Mr. McDermott expressed concern about a backlog in appealed claims concerning payment denials from Medicare recovery audit contractors. In December, the HHS Office of Medicare Hearings and Appeals announced a temporary suspension of most new requests for administrative law judge hearings concerning payment denials from RACs due to a backlog in appealed claims. Most new hearing requests will be delayed by at least two years.
Mr. McDermott wrote that he was "troubled" to learn that RACs were the reason for much of OMHA's additional workload. To address that issue, he suggested several administrative changes to the RAC program that could be enacted without intervention from Congress. One of his proposed reforms is enhanced accountability for recovery auditors, in the form of a financial penalty for RAC collections that are overturned on appeal. Additionally, RAC contracts should include performance standards for collections accuracy, Mr. McDermott wrote.
He also recommended that CMS extend the "pause" announced last month for additional documentation requests from RACs until the appeals backlog has been addressed and the RAC program has undergone "appropriate modifications." CMS paused documentation requests at the end of last month to allow auditors to complete all outstanding claims reviews and other processes before the current RAC contracts expire, as well as allowing CMS to refine and improve the RAC program.
Mr. McDermott also wrote that CMS should modify the RAC program instead of enacting the two-midnight rule. He expressed "serious reservations" about the new regulation and stated it will only exacerbate the appeals backlog. The two-midnight rule — which takes effect this October — was established by the 2014 Medicare inpatient prospective payment rule. According to the policy, inpatient admissions spanning at least two midnights qualify for Medicare Part A payments. Inpatient stays lasting fewer than two midnights must be treated and billed as outpatient services.
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