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Recovery Audit Reform Bill Calls for Financial Penalties

James Carroll, for HealthLeaders Media, October 31, 2012

Industry reaction
Following the release of the bill, the American Hospital Association (AHA) issued a letter of support, stating that "the Medicare Audit Improvement Act of 2012 provides much needed guidance for medical necessity audits, keeping auditors out of making medical decisions that should be between patients and their physicians. In addition, Recovery Auditors are not targeting widespread payment errors and are making subjective decisions on short-stay cases; their operational problems are persistent and widespread."

On the flip side, others, including Nancy Beckley, MS, MBA, CHC, president, Nancy Beckley & Associates, LLC, in Milwaukee, Wis. are more apprehensive about the legislation.

"My concern is that Congress may balance the behavior of the RACs and those inherent program problems with all the money that it returns to the Trust Fund," she says. "The proliferation of Medicare and Medicaid Integrity Programs has continued to drain resources from providers, many of whom can no longer afford to launch efforts to appeal."

Many in the provider community believe the Recovery Auditor program is being implemented and operated without regard to patient care, most notably in the denial of Part A claims and the ability to at least bill Part B claims, which is addressed in this legislation, says Beckley.

"For providers that are participating in the Part A to Part B billing demonstration, they had to give up their Part A appeal rights. My guess is that some providers/hospitals are doing this just for cash flow, yet have no appeal rights, and through this potential legislation their appeal rights will be reinstated," Beckley says.

She continues, "It may be that the whole RA [Recovery Auditor] program is fatally flawed but the misaligned incentives (contingency fees) may not allow putting this on the right course."


James Carroll is associate editor for the HCPro Revenue Cycle Institute.
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1 comments on "Recovery Audit Reform Bill Calls for Financial Penalties"


Steve Levine (10/31/2012 at 11:37 AM)
Physicians are equally troubled as hospitals by the potential ravages of the RAC. Does this law provide protections to physicians, or only to hospitals?