A recent article in the American Medical News reports a planned
massive expansion of the Medicare bureaucracy with the institution of
a new layer of Medicare bounty-hunters charged with slowing the
relentless plunge of the Medicare Trust fund into bankruptcy - by
squeezing health care providers on the Medicare "Rack":

http://www.ama-assn.org/amednews/2008/07/07/gvsa0707.htm

Excerpt:

"Aggressive tactics, vague charges, interrupted patient care, drained
staff resources and administrative headaches. These are some of the
problems doctors say they encountered during their experiences with
Medicare's newest breed of auditor.

The Centers for Medicare & Medicaid Services (CMS) this spring
wrapped up a three-year pilot program in which "Recovery Audit
Contractors," or RACs, scoured physician and hospital claims in three
states to find overpayments and to recoup those dollars for Medicare.

Thrilled by the project's financial success, lawmakers ordered CMS to
expand the program to all 50 states by 2010. The agency plans to
choose four national contractors to administer the program this
summer. A new round of audits could start right away….

Initially, contractors were paid contingency fees based on how many
Medicare overpayments they dug up. After sharp criticism from the
medical community, in spring 2006 CMS also began to base RAC fees on
underpayments they discovered.

The program has been cost effective for the government...... On
average, Medicare spends about 20 cents to recover each dollar in
overpayments….

So far, the program has focused largely on inpatient hospitals, where
a single incorrect code or duplicate charge can amount to thousands
if not tens of thousands of dollars.

Over the three-year pilot, the RACs collected less than $13 million
from physicians out of the $980 million in total overpayments they
found, with the average overpayment per physician being about $100 to
$200. The contractors found only a small fraction of underpayments,
which physicians said are more difficult for auditors to discover
through claims review....

..For physicians who come under the gaze of the contractors, the
costs to the practice can be far more than the Medicare money at
stake…Whenever the RAC made overpayment determinations, the
physicians were forced to pay the amount in question or risk accrued
interest, garnished Medicare checks or possible loss of Medicare
billing privileges. Because the contractors were paid in part based
on how many overpayments they found, they were soon referred to
as "bounty hunters," a moniker that still persists.

Physicians in California and Florida complained that the contractors
used questionable tactics. They say the RACs made medical necessity
determinations based on written Medicare coverage guidelines without
the input of a single physician.

Contractors reviewed claims that Medicare carriers already had
adjudicated, misinterpreted coding statutes and went on fishing
expeditions by demanding scores of records at a time. For the most
part, CMS officials were powerless to review the RACs' work unless a
doctor lodged an official appeal.

"There was no one auditing the auditors," Dr. Terpenning said.

She has appealed all of the thousands of dollars in overpayment
charges she received and expects to win all of them with the
exception of about $250 in billing errors that she determined her
office made. CMS reports that, as of March, one-third of such appeals
had resulted in the overpayment determination being overturned. Many
are pending…

Physicians who were reviewed by the RACs said they understand
overpayments occur and audits can benefit the program. But giving
unregulated auditors free rein to squeeze additional dollars out of
practices that already are stretched to the financial limit under
Medicare could force doctors into increasingly larger groups or out
of the program, Dr. Terpenning said….

Dr. Kaufman echoed that sentiment. "This is just one more straw on
the camel's back, and one day it's going to be the final straw."

…By 2010, Medicare is required to roll out the Recovery Audit
Contractor program to all states on a permanent basis. Four yet-to-be-
chosen regional contractors will administer the program and its
expansion.

More on the RACs program on the CMS (Medicare) website:

http://tinyurl.com/5z4qgl

http://tinyurl.com/ywdnmc