A controversial federal program could debut in Connecticut as early as this January, after a pilot version recovered nearly $1 billion in improper Medicare payments over two years.
In 2005, the U.S. Department of Health and Human Services (HHS) launched the Medicare Recovery Audit Contractor (RAC) program in New York, Florida and California, expanding the program last year to Massachusetts, South Carolina and Arizona.
Managed by the Centers for Medicare and Medicaid Services (CMS), the program aims to end unjustifiable requests for reimbursement from the federal Medicare system, whether for services that do not meet the program”™s criteria of medical necessity, payments that should have been picked up by another insurer, erroneously coded paperwork or duplicate claims.
Medicare processes 1.2 billion claims annually from more than 1 million hospitals and clinics. That equates to 9,500 a minute and under the flood Medicare claims processors often cut checks without scrutinizing records, according to HHS.
Under Medicare, the government disbursed $10.8 billion last year in improper payments, according to an estimate by the federal Office of Management and Budget, putting the program behind only the earned-income tax credit and Medicaid for improper payments.
The federal government aims to roll out the program in all 50 states by January 2010.
The New York and Massachusetts programs were managed by Connolly Consulting Inc., an Atlanta-based auditor with an office in Wilton and a data center in Darien that opened last year.
The company is one of 45 companies that have expressed interest in being one of four regional auditors, who are awarded fees based on the amount of costs they recover.
In July, several members of the U.S. House of Representatives asked the Government Accountability Office to study the use of private contractors for the audits. The congressmen said they made the request following complaints in California that the contractor incorrectly denied 40 percent of the recouped inpatient rehabilitation claims it reviewed.
Under the contingency-fee structure in place for the pilot program, contractors could pocket the fees if the collection survived a first level of appeal, even if it was reduced or reversed upon subsequent review. That will not be the case in the permanent program, CMS has indicated, and the agency plans to hire an additional, independent auditor to review the work of RAC contractors.
Similarly, more than 60 percent of such RAC appeals were overturned in New York, noted the Healthcare Association of New York State. Healthcare Association analyst Kevin Krawiecki indicated the organization is pressing CMS to limit the number of medical record requests that can be made over a six-week period and to delay RAC contractors collecting fees until after the appeals process has run its course.
In all six states, HHS estimates RAC reversed 0.3 percent of the claims it examined. In 14 percent of cases, those decisions were challenged by health providers seeking payment, roughly a third successfully.
HHS estimates the program costs 20 cents for each dollar collected.
The Connecticut Hospital Association has the changes on its radar screen, having held a training session last fall on the proposed changes. Several software and consulting companies have begun marketing efforts to help hospitals and other health care providers track the RAC audit process themselves.
