Created to discover and resolve improper Medicare payments, Recovery Audit Contractors (RACs) have become what some in the healthcare industry are calling “High Tech Bounty Hunters”[i]. They were instituted in section 306 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), and recovered approximately $1 billion between 2005 and 2008. Due to these astounding collections Section 302 of the Tax Relief and Health Care Act of 2006 made the RAC Program permanent and required the Secretary to expand the program to all 50 states by no later than 2010.[ii]
There have been 2 key components to the program’s success. First is the payment structure to the RACs. A powerful motivator is the substantial incentive payouts of up to 12.5% of the monies recovered. That’s $125,000,000 over 3 years, not bad. The second key component is their means of identifying potential overpayments.
The RACs have proprietary informatics software that regularly updates from Medicare rules and regulations, medical practice standards, and coding and billing policies. In addition they include specific services identified for likely overpayment by the OIG, the GAO and Comprehensive Error Rate Testing (CERT) findings. From this up to-the-minute regulation, terminology and medical best practices information, the RAC will identify those medical diagnoses and treatments in which claims have a high probability to be overpaid (or underpaid but finding these claims don’t pay out as much) in their region. These targeted diagnoses and patient treatments and services are then entered into the RAC database search engine or “scrubber” and they are ready for the “hunt” (I mean ready to help America collect overpayments and reduce its healthcare expenses).
Talk about an electronic full court press that is woefully one-sided! Healthcare providers have to consider all aspects of the healthcare process and quite often without the benefit of computerized assistance. First and foremost they have the responsibility of hands on care of patients with multi-morbidities through continual enhancement and application of medical knowledge. Next they have to learn and comply with an assortment of regulations, billing policies and procedures. Extensive and changing documentation terminology has to be internalized to ensure immediate and consistent usage. Finally they have the complex task of managing their Practices.
In contrast, RACs have a single focus of reviewing medical billing and care documentation with exceptionally effective proprietary software. This is augmented by medically trained people when needed. Such as when there is no definitive Medicare rule for the healthcare Providers to follow or when nothing has been found but the RAC still thinks there is a high probability that an overpayment exists. Sounds fair so far doesn’t it? But, it gets better. Over a 45 day period RACs can request up to 500 records (depending on the size of the healthcare provider) going back 3 years. Once the RACs have the billing and any electronic data they mine/scrub it for inconsistencies and require repayment for any discrepancy. An alternate interpretation of terminology or understanding of “Best Practices” between (multiple) healthcare providers who provided medical care to the same patient causes everyone to be identified as overpaid and potentially fraudulent. One physician codes as mild and the other codes as moderate and now 3 years later both of them and the hospital where the patient was treated have to repay at least some if not all of their reimbursement. (The patient got better by the way and tells everyone about the great care that saved his life.) .
“Like shooting fish in a barrel” comes to mind. The RAC earns 12.5% of the recovery just by employing a software program that can detect minute differences in complex medical documentation and subsequent billing. Repayment is immediate and appeals can take years to resolve. No wonder RACs are being referred to as High Tech Bounty Hunters. A misuse of healthcare informatics? Medicare and the RACs don’t think so but ask any healthcare provider who has gone through this process and you will get a resounding YES!!!
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