On June 25, the Senate Finance Committee held a hearing to address the Medicare Recovery Audit Contractor (RAC) Program. Committee members expressed concern that the RAC program creates unreasonable administrative burdens for healthcare providers.

The hearing featured testimony from representatives of two providers who explained that the RAC program results in the denial of legitimate claims, burdens providers unnecessarily and has caused many physicians to place patients in observation status out of fear of an inpatient denial from the RAC. The providers also pointed out areas of the program in need of improvement, including the need for clear guidelines from CMS. A representative from CGI Federal Inc., the Region B RAC, testified in support of the RAC program.

Finance Committee Chairman Max Baucus (D-MT) stated that while he supports audits of Medicare providers, he is also concerned about the burden that RACs present for providers. Baucus stated that Medicare should give contractors incentives to focus “on the most at-risk services and providers,” and Medicare should also improve provider education and take steps to make the RAC appeals process more efficient. Ranking Member Orrin G. Hatch (R-UT) also stated he is concerned by the increasing burdens posed by the RAC program. Hatch noted that he is in favor of limiting the amount of medical records RACs can request from providers and reducing the look-back period. In addition, Hatch stated that Medicare must maintain the appropriate balance between protecting Medicare’s finances and avoiding excessive administrative burdens on providers.

To read the statements or view the hearing, click here. To read more about pending bipartisan legislation aimed at improving the RAC program, click here.