RAC Reform Legislation Reintroduced in House


RAC Reform Legislation Reintroduced in House

On April 30, 2015, Representatives Sam Graves (R-MO) and Adam Schiff (D-CA) reintroduced H.R. 2156, the Medicare Audit Improvement Act of 2015.  H.R. 2156 contains a number of significant new provisions from legislation of the same name introduced last Congress and focuses on the way that Recovery Audit Contractors (RACs) are paid, replacing RACs’ contingency fee payment structure with a flat fee to align with how other Medicare contractors are compensated. 

Legislators previously introduced a similar version of the bill in a prior congressional session.  The new version of the legislation would prohibit CMS from making any incentive payments to RACs in addition to the new flat fee payments.  The bill would also direct CMS to reduce payments, on a sliding scale, to RACs with a high rate of overturned complex audit denials.  The bill defines a high complex audit denial overturn rate as ten percent or greater for any contract year, and CMS would be directed to calculate the overturned complex audit denial rate “in a fair and transparent manner.”  CMS would have the discretion to apply the payment reduction either on a per-claim basis or based on the overall fee paid to the RAC.  H.R. 2156 also contains a new provision to limit RACs to considering only information available to the admitting physician at the time of inpatient admission when determining whether inpatient services were medically reasonable and necessary. 

Proposals not included in the 2015 legislation include limits on medical records requests, requiring RACs with high error rates to pay penalties to hospitals, limiting RAC audits to claim types that meet a minimum error rate, and requiring RACs to hire physicians to review each claim before denial.  However, one provision included in both versions of the legislation would eliminate the one-year timely filing limit for rebilling Part A claims under Part B, when those claims are denied by a Medicare contractor because they are found to be not medically necessary and reasonable. 

H.R. 2156, which has ten cosponsors as of May 11, has been referred to the House Committees on Energy and Commerce and on Ways and Means.  The current status of the bill is available here.

The King & Spalding RAC Coalition continues to press for fundamental and lasting RAC reform.  The Coalition is an ad-hoc group of hospital clients created in April 2013 in an effort to communicate jointly to CMS and Congress the need for meaningful and common-sense reforms to the RAC program.

Reporter, Allison Kassir, Washington, D.C., + 1 202 626 5600, [email protected]

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