Home Health & Hospice Week

RACs collect $371.5 million from Medicare providers.

Recovery audit contractors have laid off home care providers so far, but don't expect that to last forever--especially with the RAC demonstration soon becoming permanent.

The Centers for Medicare & Medicaid Services says it recovered $371.5 million in improper Medicare payments last year, thanks to the help of RACs in California, Florida and New York.

In place since 2005, the RAC demonstration program has been picking up steam over the past year and is now targeting improper payments in California, Florida, New York, Massachusetts, South Carolina and Arizona.

"The RAC demonstration program has proven to be successful in returning overpayments to the Trust Fund and identifying ways to prevent future improper payments," Acting CMS Administrator Kerry Weems says, touting the RACs' success rates. "We will use the lessons we learned from the demonstration program to help us implement the national RAC program next year."

Improper incentives: But other providers aren't eager to welcome RACs into their regions. Demonstration-state providers consider RACs to be tantamount to "bounty hunters" because the RAC contractors get paid based on how much money they collect. And in those states with current RAC programs, tensions are rising.

Rep. Lois Capps (D-CA) introduced legislation late last year that would institute a one-year moratorium on the RAC program. If voted into law, the moratorium would affect not just California providers, but the entire United States.

"We need to quickly enact this legislation to protect health care providers and patients in California and across the country from this deeply flawed Recovery Audit Contract program," Capps said in a statement. "Unfortunately, CMS has botched this program from the start and it appears to be unwilling or unable to adequately address the serious problems with the program."

The bill's co-sponsor Devin Nunes (R-CA) criticized RACs' improper incentives. "It is essential that medical judgment not be superseded by the views of accountants who earn their income from contingency fees," he said in the statement.

Note: More information about the RAC program is at www.cms.hhs.gov/RAC. To review Capps' and Nunes' legislation, go to www.house.gov/list/speech/ca23_capps/morenews/pr110807_RAC.shtml.