CMA supports bill that would reform Medicare RAC audit program

August 18, 2015

The California Medical Association (CMA) is urging California's congressional representatives to co-sponsor The Fair Medical Audits Act of 2015 (H.R. 2568). This legislation addresses many concerns that physicians have with regard to the extraordinary lack of transparency and expensive, time-consuming and often unfair processes that plague the Medicare Recovery Audit Contractor (RAC) program.

Currently, Medicare pays recovery audit contractors on a contingency basis to find overpayments to health care providers, providing these contractors with undue monetary incentives to audit doctors. H.R. 2568 would establish incentives for RACs to make more accurate audit findings and increase educational efforts to help physicians avoid common mistakes. Since its inception, CMA has advocated for more fair and transparent medical audits.

Specifically, the bill would require RACs to provide 90 days prior notice to a physician’s office of an audit, educate physicians after the audit as to any incorrect billing practices, establish a more sound extrapolation formula that removes the outliers, reimburse costly documentation requests to reduce physician burden, and employ qualified auditors. It also would only allow a two-year look-back period, but most importantly, the bill would prohibit RACs from recouping payments until the appeals process is final and impose penalties on the auditors for inaccurate findings while providing financial incentives for RACs to educate physicians.

"These audits have become a costly hassle for physician offices with little savings accruing to the Medicare program," said CMA President Luther F. Cobb, M.D., in a letter to the California congressional delegation. "There is no transparency or due process in the program, the financial incentives are misaligned, and there is no opportunity for physicians to be appropriately educated as to any billing mistakes so they can be corrected in the future.”

Nearly half of the audit findings are overturned by an administrative law judge when a physician appeals. "When half of the audits on appeal are overturned – at great expense to physicians – that should be a red flag…that this program is not working," wrote Dr. Cobb.

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


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