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CMA supports bill to eliminate RAC incentives that cause punitive and burdensome auditing



May 26, 2015
Area(s) of Interest: Advocacy Payor Contracting 

The California Medical Association (CMA) has announced its support of a bill introduced in Congress on May 22 that would reform the Medicare Recovery Audit Contractors (RAC) system. It is titled the Fair Medical Audits Act of 2015 and was introduced by North Carolina Congressman George Holding.


The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 established the Medicare RAC program to combat fraud and waste in the Medicare system. Initially launched in 2005 as a demonstration project in three states (California, Florida and New York), the Centers for Medicare and Medicaid Services (CMS) in 2007 ordered the nationwide expansion of the RAC program by January 1, 2010.


Other provisions of the Fair Medical Audits Act of 2015 would establish penalties on RAC contractors for incorrect audit findings; require the use of qualified audit professionals, including the use of physicians of the same specialty and subspecialty to conduct medical necessity reviews; and require the use of statistically sound extrapolation formulas. The bill only allows RAC to recover back two years instead of four years. The bill would also cut down on the need for audits by allowing payments to RACs for education programs to providers on commonly found billing and coding errors and correct coding. The bill would also require that RACs give a 90-day advance notice of audits based on overutilization of codes. Most important, it would not allow the RACs to collect physician overpayments until the appeals process has been finalized.


The California Medical Association (CMA) has been working long and hard to end the punitive practices of these RAC audits and feels that the 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 current Medicare audit program. A CMS-authored study found that “as of March 2010, an astonishing 64.4 percent of appealed RAC re-openings resulted in decisions favorable to the provider.”


“The fact that more than half of all RAC audits are overturned by an administrative law judge when a physician appeals the findings tells CMA that something is drastically wrong with the incentives in the program,” said CMA President, Luther F. Cobb, M.D.


The bill ensures due process for physicians in the Medicare program. The education component alone will save Medicare program resources. It will protect access to care by ensuring that physicians are treated fairly and that they remain in the Medicare program.


Click here to read a summary of the bill.


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

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