Within the federal appropriations bill recently passed by Congress, soon to be signed by President Obama, is little known language that instructs the Centers for Medicare & Medicaid Services (CMS) to improve the Medicare Recovery Audit Contractor (RAC) program.

The 1,582-page federal spending plan for the 2014-2015 fiscal year contains a paragraph that states the CMS RACs have financial incentives causing them to be too aggressive in their retrospective audits of physicians. “Information received from the Office of Medicare Hearings and Appeals (OMHA) indicates that about 50 percent of the estimated 43,000 appeals were fully or partially overturned (yearly). The fiscal year 2015 budget request should include a plan with a time line, goals, and measurable objectives to improve the RAC process,” the budget plan states.

Language in the budget also says that CMS is expected to work with Congress and stakeholders to identify challenges and additional reforms to the RAC program. “CMS should establish a systematic feedback process with the OMHA, CMS programs and the RACs to prevent the appearance that RACs are selecting determinations to increase their fees. The CMS is urged to stay focused on improvements to all operations that prevent improper payments in lieu of chasing dollars after the fact.”

In 2012 Members of the California Medical Association's (CMA) House of Delegates spoke out strongly against aggressive down coding efforts by RACs and adopted policy that officially put the association on record as opposing the practice.

Resolution, 222-12, stemmed from an ongoing problem with an out-of-state auditing firm, Connolly Healthcare, selectively downcoding claims on behalf of Medicare, forcing physicians to undertake costly and time-consuming appeals.

The audits and subsequent downcodes, which several speakers equated to financial "bounty hunting" on behalf of the CMS were almost always reversed upon physician appeal, which suggested that they were of little merit to begin with, speakers said.

"I can't tell you how outraged we doctors should be that this is going on," James Hinsdale, M.D., a past CMA president, said during the resolution's floor debate.

Successful passage of the resolution brought CMA in line with the American Medical Association’s (AMA) position on the matter. Both CMA and AMA have been lobbying long and hard to bring about change to this punitive process.

Contact: Elizabeth McNeil, (800) 786-4262 or emcneil@cmadocs.org.