News Releases

WASHINGTON, D.C. – Today, U.S. Senator Jerry Moran (R-Kan.), Ranking Member on the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education and Related Agencies, met with Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner to discuss his ongoing concerns with the Medicare Recovery Audit Contractor (RAC) program.

“I have heard from so many Kansas hospitals and health care providers who are frustrated with the flawed RAC program,” Sen. Moran said. “They have been forced to divert significant resources away from caring for patients to appeal incorrect audit decisions that are ultimately overturned. I’ve raised several concerns about this program in letters to HHS, at Appropriations Committee hearings and through language included in the FY2014 Omnibus Appropriations bill, so I was pleased to visit with Administrator Tavenner today. We need to achieve a balance of safeguarding Medicare finances while avoiding costly burdens on hospitals and health care providers that are affecting their ability to care for patients.”

CMS is the division of the U.S. Department of Health and Human Services (HHS) responsible for administering Medicare and Medicaid. The RAC program focuses on post-payment reviews of Medicare claims from health care providers to prevent improper payments, but unfortunately flaws in the program are yielding incorrect audit results. This broken program is unreasonably burdening providers, and has created a two-year appeals backlog at HHS’ Office of Medicare Hearings and Appeals (OMHA). According to the HHS Inspector General, 56 percent of RAC appeals are reversed at OMHA, while several Kansas hospitals have appeal-win rates around 95 percent.

During the meeting, Administrator Tavenner and Sen. Moran discussed actions CMS is taking to improve the RAC program and the related backlog issues at OMHA. In particular, Administrator Tavenner said CMS will:

  • Continue the current RAC moratorium on new reviews for 3-6 months to alleviate the current backlog;
  • Withhold contingency fees from RACs until the second level of appeals levels are exhausted. This will allow health care providers continued use of the disputed funds to support ongoing business operations instead of having them frozen until cases are fully resolved;
  • Establish a quality standard (90 percent accuracy rate) on appeals for RACs. If RACs do not meet this threshold, they will be subject to financial penalty;
  • Require auditors to adjust their document requests based on the size of the provider and a provider’s denial of claims rate. Currently, RACs request documents from health care providers regardless of the resources available to the responding office or its track record of successful compliance with Medicare payment rules. This requirement will force RACs to limit their document requests based on the claim type and focus their efforts on bad actors;
  • Allow a 30-day discussion period before claims are sent to Medicare Administrative Contractors for adjustment requiring auditors to acknowledge receipt within three days of such a request. Currently, RACs are required to stop further discussions upon notification of an appeal by the health care provider. This will allow providers an opportunity to fully discuss their claims with auditors before filing an appeal.

These initiatives are important initial steps toward improving the RAC program and alleviating the burden on health care providers. Additionally, HHS has established a working group to review the appeals process and offer recommendations to resolve the RAC and OMHA appeals backlog issues. Sen. Moran will follow-up on this issue at the FY2015 HHS hearing scheduled for May 7, 2014 with HHS Secretary Sebelius.

Sen. Moran and Administrator Tavenner also discussed Sen. Moran’s opposition to Obama Administration proposals that would cut reimbursements to Critical Access Hospitals (CAHs) and eliminate hospitals from the CAH program. Additionally, they visited about CMS’ cuts to Medicare reimbursement for home health care services, which are threatening many Kansas seniors’ access home health care. Home health care is a cost-effective alternative to other forms of care – especially in rural areas where patients tend to be more geographically dispersed.  Sen. Moran also expressed his objection to CMS’ unreasonable and inflexible physician supervision rules relating to the provision of outpatient therapeutic services. These regulations are making it difficult for many hospitals in Kansas and other rural states to provide these services to patients.  In February, the Senate passed S. 1954, legislation Sen. Moran introduced to prevent the federal government from enforcing these burdensome supervision regulations for CAHs and other small, rural hospitals in 2014. 

During his time in Congress, Sen. Moran has visited every community hospital in Kansas. The visits are extremely useful because they give him the opportunity to talk with Kansas health care providers and learn more about how they care for the residents of their communities.

Click here to read Sen. Moran’s Jan. 29, 2014 letter to HHS Secretary Sebelius stressing the importance of addressing the RAC program’s flaws.

Click here to read Sen. Moran’s Aug. 1, 2013, letter to HHS Secretary Sebelius asking for an update on HHS’ efforts to improve the RAC program.