Medicare Audit Improvement Act of 2015 Proposes Revised RAC Audits Just in time for ICD-10

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Medicare Audit Improvement Act of 2015 Proposes Revised RAC Audits Just in time for ICD-10

Both sides of the aisle in Washington DC believe that the current approach of auditing health care providers needs to be changed.   Recently, representatives Sam Graves (R-MO) and Adam Schiff (D-CA) introduced HR 2156, the Medicare Audit Improvement Act of 2015.  This legislation proposes changes to the Recovery Audit Contractor (RAC) program from a bounty hunter approach to a flat fee.  Auditors would also be held accountable for poor performance.  The hope is that this will make RAC audits more reasonable instead of being overly invasive and overzealous.  The RAC audit practice combined with Meaningful Use audits has been a doubly serious audit process for many providers.

The bill would accomplish these changes, if passed:

  • Require RACs to make inpatient claims decisions using exactly the same information the physician had when treating the patient, not information that becomes available after the patient leaves the hospital.
  • Hold RACs more accountable by setting payments to RACs at lower rates if there is poor RAC performance due to high rates of incorrect denials;
  • The bill would eliminate the current RAC contingency fee structure. Instead, the bill would direct the Centers for Medicare & Medicaid Services (CMS) to pay RACs flat fees to reduce the financial incentive for overzealous auditing practices;
  • Set an improved and more transparent method to calculate RACs total appeal overturn rates;
  • Fix CMS’s unfair rebilling rules by allowing hospitals to rebill claims when appropriate;

This bill is timely.  The shift to ICD-10 will create more opportunities for audits in documenting the patient condition and entering diagnosis and procedure codes, and may cause some shifts in reimbursement.  Therefore RAC auditors would be incentivized to do what is reasonable rather than opportunistic.

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About the Author:

Michael is Managing Partner & CEO of No World Borders, a leading health care management and IT consulting firm. He leads a team that provides Cybersecurity best practices for healthcare clients, ICD-10 Consulting, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, Insurance Fraud, payor-provider disputes, and consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $4 billion in healthcare mergers and acquisitions. Education: UC Irvine - Economics and Computer Science, University of Southern California - Business, Stanford Medical School - Biomedical Informatics, Harvard Law School - Bioethics.
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