The American Hospital Association is supporting legislation introduced in the U.S. Senate to impose significant new restrictions on the Medicare Recovery Audit Contractors program.

Sens. Roy Blunt (R-Mo.) and Mark Pryor (D-Ark.) are sponsoring S. 1012, which was sent to the Finance Committee and is identical to H.R. 1250 introduced in the U.S. House in March with bi-partisan support.

The bills would set limits on the amount of prepayment and postpayment audit requests for additional documentation that a hospital can receive annually, and has safeguards against RACs increasing the number of requests as the year draws to an end:

“Such maximum limit shall be applied incrementally as a limit for requests for additional documentation in 45-day periods during the year so that the maximum number of such requests in a 45-day period is 500 or, in the case of a hospital that receives less than $100,000,000 in Medicare inpatient hospital payments in the previous year, 350.”

The legislation also would set request limits for each hospital claim type, and imposes financial penalties on RACs for failure to comply with required deadlines and timely communications. It further would require payment of a fee to the prevailing party for each claim denial overturned on appeal, with the fee reflecting the cost of appealing a claim. That is a critical point because AHA data shows hospitals that fight RAC denials win on appeal 72 percent of the time, but the appeals process is lengthy and expensive.

“This legislation provides much needed guidance for auditors while keeping them out of making medical decisions that should be between patients and their physicians,” the AHA notes in a statement. “It also will improve recovery auditor transparency and allow denied inpatient claims to be billed as outpatient claims when appropriate.”

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