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No, that headline is not a typo.You might think the proper question would be to ask “what” the RACs are, but asking  “who” is not an unreasonable query.

Why is this? First, let’s look at what a RAC (now referred to as a recovery auditor, or RA, by the Centers for Medicare & Medicaid Services, or CMS) really is: a corporate entity that has contracted with CMS to audit payments made to Medicare providers in order to determine whether they were paid appropriately – or whether the provider is entitled to additional payment in the event of underbilling or subject to recovery and loss of revenue if they billed for too much. For this RACs receive a contingency fee of 9 to 12.5 percent of the net funds collected as a result of the errors they detect.

Yet the above description answers “What is a RAC?” but doesn’t answer “Who are the RACs?” A corporation is a legal entity without physical form, but its functions are performed by people. Even though the Supreme Court found that “corporations are people,”(Citizens United v. Federal Election Commission, 558 U.S. 50, 2010), legal entities don’t read medical charts or make decisions on whether a hospital will be paid for a given service. Hence the modified question: “Who is responsible for the RACs decisions?”.

Let’s start at the top. Do we know if the corporations that actually contract with CMS are actually doing the work themselves, or have they subcontracted their reviews? If they do use subcontractors, how are they monitored to ensure quality and conformance with regulations? Which reviews were done by the recovery auditor and which by a subcontractor?  Is there a difference in denial rate, standards or quality?  Also, how are the subcontractors paid: on a contingency fee (which would tend to reward denials) or via a flat rate (which is more likely to result in impartial reviews)? This information is not readily available to providers.

After the RAC Demonstration Project was criticized for lack of physician leadership, under the permanent program (implemented Jan. 1, 2010) each RAC region was given a medical director responsible for overseeing his or her program. This amounts to four physician medical directors in the entire country. It is critically important to have physician leadership for any medical audit program, but one has to question how effective a single physician can be in overseeing one-fourth of a national program. At what level are they involved in policymaking? Do they monitor their programs closely for accuracy and error rates? 

And finally, who are the reviewers in all of this? The Statement of Work (SOW) for the RAC Program  for the 2012 fiscal year (http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/recovery-audit-program/downloads/090111RACFinSOW.pdf) states that “whenever performing complex coverage or coding reviews (i.e., reviews involving the medical record), the Recovery Auditor shall ensure that coverage/medical necessity determinations are made by RNs or therapists and that coding determinations are made by certified coders.” There is no requirement that the RNs have any hospital, adult or geriatric medicine experience yet they are reviewing medical necessity for hospital admission and various treatments for geriatric (Medicare) patients. According to the SOW, the reviewers don’t even have to be trained in case management or admission criteria. In fact, a pediatric ICU nurse could be making determinations on the medical necessity for admission (and whether the hospital will be paid) for Medicare patients who are in their nineties. “Therapists” could be in the role in which they are reviewing complex medical decisions made by physicians – something that is clearly outside their scope of practice, training and skill According to the 2012 SOW, “when making individual claim determinations, the Recovery Auditor shall utilize appropriate medical literature and apply appropriate clinical judgment. The Recovery Auditor shall consider the broad range of available evidence and evaluate its quality before making individual claim determinations.” Yet is there accountability for reviewers with an excessive number of appeals and losses?

Surprisingly, the reviewers are instructed to read medical literature and to use their clinical judgment, but they aren’t told to follow Medicare admission and billing guidelines. So wouldn’t it be reasonable to ask again: Who are these RAC reviewers, what are their credentials, and how are they trained? What standards are they using to review and deny claims? The SOW states that “Recovery Auditors shall maintain and provide documentation, upon the provider’s request, the credentials of the individuals making the medical review determinations.” So providers do have a right to know who the RAC is if they ask, but this information does not lessen the sting of a denial for care that the hospital believes was medically necessary and provided in the appropriate setting.

RACTrac data, which is reported voluntarily by more than 2,000 hospitals across the nation through the American Hospital Association (http://www.aha.org/advocacy-issues/rac/ractrac.shtml) indicates that through the second quarter of the 2012 fiscal year, 41 percent of RAC denials were appealed – and for those cases in which the appeals process had run its course, 75 percent were decided in favor of the hospital. Assuming that all of the unappealed denials were truly unappealable (which is not necessarily the case) these figures suggest (a 31 percent error rate. 

This fact gives even more reason to ask the question: Who are the RACs?

About the Author

Steven J. Meyerson, MD, is a Vice President of Accretive Physician Advisory Services®. He is Board Certified in Internal Medicine and Geriatrics. He has recently been the medical director of care management and a compliance leader of a large multi hospital system in Florida. He has distinguished himself by creating innovative service lines and managing education for Accretive PAS®.

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Steven J. Meyerson, MD, CHCQM-PHYADV

Steven Meyerson, MD, CHCQM-PHYADV, is the founder of Steven Meyerson Consulting. Dr. Meyerson is a nationally recognized expert and consultant in the physician advisor role, case management, and hospital Medicare compliance. He is board certified in internal medicine and geriatrics and serves on the board of the American College of Physician Advisors (ACPA). He edits and writes for the ACPA online blog.

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