Health Care BS

I noted recently that a gang of pirates auditors was about to descend on America’s hospitals in search of Medicare “overpayments.” These “Recovery Audit Contractors,” who are paid a percentage of the booty recoveries, will be ransacking patient charts in search of “errors.” 

Well, the RAC program is now being rolled out nationwide, and this CMS report outlining the results of the original pilot project makes it clear that these auditors make their money by second-guessing the coding and clinical decisions of hospitals and doctors.

The following chart shows the categories of errors fabricated found by the RACs. A whopping 42% involved diagnosis coding. This means that the patient’s doctor arrived at a diagnosis of X and the auditors have retroactively said “Nope, sorry doc, it was actually Y.”

Even worse, 32% of the of the purported errors involve the RAC auditors deciding (years after the patient has gone home) that the services ordered by the physician and rendered by the hospital were not medically necessary. And the people making this call are not physicians.

The total amount “recovered” in this scam was $357 million for 3 states.  And Medicare doesn’t simply ask for a refund on these “errors.” It subtracts the money from payments owed to hospitals for current services. This bankrupted a number of hospitals in California, Florida and New York.

And what if the auditors have made a bad call? Well, the hospital is guilty until proven innocent. When a hospital objects to the decision of the RAC, it must appeal to … Medicare. And since a favorable decision for the hospital means Medicare loses money, very few of the RAC decisions are overturned.

This RAC program could well be the undoing of the community hospital system. Despite the BS that appears in the establishment media, nearly two-thirds of not-for-profit community hospitals lose money on patient care. Many simply cannot survive the kind of hit that comes with a RAC raid.

Like the idea of driving 50 miles to the nearest acute care hospital? That’s what you’ll be doing when the geniuses at CMS are finished “controlling costs.”