McDermott urges RAC penalties for successfully appealed decisions

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Medicare recovery audit contractors should face financial penalties when providers successfully challenge their decisions, Rep. Jim McDermott (D-WA) stated in a recent letter to the head of the Health and Human Services Department.

McDermott's March 18 letter focused on the staggering backlog of provider appeals pending with the Office of Medicare Hearings and Appeals. New appeals from providers at the administrative law judge level have been frozen for at least two years, to allow the judges to tackle the cases before them, OMHA recently announced. Many of these appeals are related to RAC decisions on issues such as inappropriate payments, McDermott noted in his letter to HHS Secretary Kathleen Sebelius.

Because it “seems to be the case” that providers are winning their RAC appeals “by large margins,” financial penalties should be assessed against the auditors when their decisions are overturned, McDermott argued. These could take the form of auditors covering the cost of the appeal, McDermott suggested. Sebelius could implement this policy without Congressional action, he emphasized.

McDermott also slammed the so-called “two-midnight” policy in his letter. This was meant to clarify inpatient admissions standards for hospitals, reducing appeals related to this issue. However, confusion about the policy has led to delayed enforcement and likely will “exacerbate the appeals backlog,” McDermott wrote.

McDermott, the ranking member of the Ways and Means Subcommittee on Health, is a prominent voice on long-term care issues. Currently, the House is weighing his bill that would eliminate the three-day hospital inpatient requirement to qualify for Medicare coverage of skilled nursing care. Long-term care advocates are actively lobbying for the measure.

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