CMS Chief Pens Blog Post on Changes to How RACs Operate

Verma acknowledges lingering gripes about the RACs, pledges to do better.

In touting the federal government’s efforts to make the realities of dealing with Recovery Audit Contractors (RACs) more palatable for providers across the country, one of the nation’s top health officials apparently couldn’t help but take a swing at the concept of universal care.

“Some argue the solution to our nation’s healthcare problems is a government-run health insurance program for everyone. While they may point to Medicare’s low administrative costs as a reason to expand the program, the reality is that these costs are low in part because we must target our program integrity efforts,” Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma wrote to open a blog post published online Thursday. “Due to the size of the Medicare program – our systems process over one billion claims a year – we are able to review less than 1 percent of claims that Medicare receives each year, which means the Medicare program can be susceptible to more improper payments, fraud, and abuse than in the private sector.”

“Two of our top priorities at CMS are taking a strategic approach to protecting taxpayer dollars and reducing regulation to put patients over paperwork,” Verma continued. “Our work includes reducing erroneous and inappropriate payments and risks, and developing effective program integrity controls to ensure that every taxpayer dollar serves its intended purpose.”

The United States remains one of a select few developed nations anywhere in the world still lacking universal healthcare. A landmark 2017 Commonwealth Fund study examined 72 indicators across the healthcare systems of 11 such nations – Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States – and ranked the U.S. system first in government spending per patient (even despite a centralized system of care), but last in outcomes, both by overwhelming margins.

The national debate over what direction federal involvement in healthcare is going, following 2010 passage of the Patient Protection and Affordable Care Act (PPACA) and its tenuous survival, is certain to be a frequent topic of discussion during fierce campaigning leading up to next year’s presidential election.

It might seem an odd way to begin discussion of the considerably more focused topic of federal oversight of the existing healthcare system. But Verma devoted most of the remainder of her blog post to just that, noting that CMS has worked to bring improper Medicare payments to their lowest point since 2010.

“But more work is needed to achieve increased and consistent reductions to the improper payments rate in the future,” she added, before acknowledging criticism of the most prominent example of the entities that exist for that purpose: the RACs.

“In the past, there were numerous complaints about the RAC program. Providers found the audits time-consuming, necessitating high administrative expenses, and often requiring lengthy appeals. Thanks to recent efforts by this Administration, complaints about RACs have decreased significantly,” Verma wrote. “Stakeholders have expressed surprise, and wondered what happened. What happened is this: CMS listened to what providers were telling us, and we made meaningful changes. That input informed our thinking as we re-examined all aspects of our RAC processes. We identified areas where we could reduce provider burden and appeals, and increase program transparency while enhancing program oversight and effectiveness.”

As a result, Verma added, CMS has “reduced RAC-related provider burden to an all-time low, as evidenced by the significant decrease in the number of RAC-reviewed claim determinations that are appealed and the corresponding reduction in the appeals backlog.”

No metric gauging “RAC-related provider burden” or the appeal rate was supplied for context, but Verma did go into further detail regarding ways in which CMS has reformed the program, notably noting that the contractors are now required to maintain a 95 percent accuracy score, with RACs that fail to maintain that benchmark receiving a progressive reduction in the number of claims they are allowed to review.

“We also require RACs to maintain an overturn rate of less than 10 percent. Failure to maintain such a rate will also result in a progressive reduction in the number of claims the RAC can review,” Verma wrote. “RACs will not receive a contingency fee until after the second level of appeal is exhausted. Previously, RACs were paid immediately upon denial and recoupment of the claim. This delay in payment helps assure providers that the RAC’s decision was correct before they are paid.”

Also, Verma noted, previously, RACs could select a certain type of claim to audit. Now, they must audit proportionately to the types of claims a provider submits.

“We (also) gave providers more time to submit additional documentation before needing to repay a claim. This 30-day discussion period, after an improper payment is identified, means that providers do not have to choose between initiating a discussion and filing an appeal,” Verma wrote. “CMS expects this will continue to reduce the number of appeals.”

Additionally, Verma said, CMS continues to regularly seek public comment on newly proposed RAC areas for review, before the reviews begin, allowing providers to voice concerns regarding potentially unclear policies that will be part of the review. And CMS “recently required RACs to enhance their provider portals to make it easier to understand the status of claims.”

“CMS’s program integrity functions for Medicare, Medicaid, and the Exchanges help us hold the entire healthcare system accountable, protect beneficiaries from harm, and safeguard taxpayer dollars to empower patients while minimizing unnecessary provider burden,” Verma concluded. “CMS is focusing on results by ensuring that the right payments are made at the right time for the right beneficiary for covered, appropriate, and medically reasonable and necessary services in the Medicare program – while allowing providers to focus on their primary mission of improving patients’ health.”

Dr. Ronald Hirsch (MD, FACP, CHCQM), vice president of the Regulations and Education Group at R1 Physician Advisory Services and a member of the Advisory Board of the American College of Physician Advisors and the American Case Management Association, reacted to the blog post with a healthy and hearty dose of skepticism that also referenced Verma’s glaring paucity of specifics and metrics.

“Despite CMS’s support for the RAC program, we have not seen a RAC Report to Congress since 2016. Are they really doing a better job? What are they auditing? How many denials are being overturned on discussion or appeal? I need a lot more data to decide if these truly are the friendlier RACs, as CMS portrays them to be in this blog,” Hirsch said. “There may also be an ulterior motive to this announcement. On April 24, CMS put out a notice that they will be using the RACs to perform audits where there is a (U.S. Department of Health and Human Services) OIG (Office of Inspector General) or DOJ (Department of Justice) investigation. Perhaps they are trying to paint a more favorable picture of the RACs as they start using them for these potentially criminal investigations.”