In 2003, the federal government passed the Medicare Modernization Act, creating a program that detects and corrects improper payments by Medicare. In 2005, they began using Recovery Audit Contractors to perform the work of identifying improper Medicare payments.
The RAC program has become an absolute disaster for hospitals. Currently, WMHS has $4 million tied up with RAC auditors, who are incentivized by the feds to ferret out improper payments. We take billing Medicare (and all other payors) very seriously and have chosen to be aggressive in challenging the RAC. Every claim has been denied on appeal through a virtual "rubber stamp" approach. Each case takes about ten months to process, again resulting in a denial.
The third appeal level is with an Administrative Law Judge, who is the first individual not incentivized as to the outcome of their decision. We have been very successful winning every appeal at the ALJ level. Because of our success and the success of others, that process has been slowed to a crawl. We are now getting letters indicating that because of a backlog of cases they cannot render opinions at the ALJ level.
An interim step has also been added that any time we appeal at the ALJ level, we first have to notify the patient as to our appeal, which sends a panic through every patient notified. We are spending excessive amounts of time and money on these appeals because there is a great deal at stake.
The American Hospital Association has taken a very active role in trying to bring improvement to the RAC process and now there are bills in Congress to rectify this broken process. WMHS is actively involved with AHA since we have so much at stake. Four million dollars tied up for one health system in a heavily flawed program in this economy is a "very big deal" and it needs to be solved immediately.