by Nick Jacobs

RAC is the magic bullet that CMS (Centers for Medicare and Medicaid Services) is using to describe the new federal Medicare Recovery Audit Contractor program that was officially started last week. RAC was started by the Medicare Modernization Act of 2003 to identify and correct improper payments. Third-party auditors get to keep a piece of the payments they identify and collect as inappropriate.

Not unlike the health care environment created during the Clinton Administration, there seems to be a natural assumption that hospitals are basically working day and night to game the system.

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Let’s see; first, the most complex, onerous, burdensome, tedious, time consuming billing system in the world is created by the government, then the government finds an even more complicated way to come back and evaluate our ability to maneuver appropriately through the white water park that they themselves are completely responsible for creating. The RAC auditors can demand virtually any number of patient charts, and then take the money back from months and years earlier and keep a portion of it.

An article entitled RAC opinion-steering by Jennifer Lubell in this week’s Modern Healthcare provides us with additional insights on this subject. It is obvious that this program is intended to accomplish one very important thing for CMS and that is to save them money. The collection or recollection, or reconciliation, or bounty hunting as referred to in the article is only going to cost Medicare about 20 cents on the dollar, not a bad return.

When the hue and cry against government control is heard every time nationalized medicine is even hinted at, it is understandable. All you have to do is spend a day with a hospital compliance officer to understand how deep federal regulations go on thousands of levels.

The only good news for hospitals is that, if they conduct their own RAC audits and self-disclose any findings, they can be exempt from government funded RAC audits.