From the Department of Why Didn’t We Think of This Sooner?

The American Hospital Association formally proposed last week that Recovery Audit Contractors (RACs) be fined when their denials are overturned on appeal.

And this wasn’t just gratuitous advice. The AHA was responding to a plea by the Office of Medicare Hearings & Appeals for ideas on how to ease the mountainous backlog of claims at the Administrative Law Judge level. How mountainous? Over 800,000 at last count.

In responding the AHA said, “Fundamental reform of the RAC process is at the heart of an effective and permanent solution to the appeal backlog problem.”  And the specific reform the AHA has in mind?  Assess a financial penalty on a RAC whenever one of its denials is overturned on appeal.  That would “lessen the strong financial incentives and promote more appropriate and accurate assessments.”

There’s no truth to the rumor that the AHA also proposed that a portion of each RAC fine should go to the hospital that wins the appeal.