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If your RAC isn’t broke yet, will they soon be? How would you play Deal or No Deal?

Will RACs be required to forfeit any amount of the contingency fees that they received for the claims that they denied, and which are now in appeals and included in CMS’ Aug. 29 settlement offer?  That is the question that the American Hospital Association (AHA) asked in its September 24, 2014 letter to CMS, which can be read online here.

The fact that the AHA is asking the same question that a taxpayor would ask about how CMS will spend this contingency money, raises the question of why CMS is not more transparent about how RACs will fare.  More than 800,000 claims are in appeal status and no one would argue that CMS has contributed to the appearance of a less than transparent RAC program since day one.

The only written documentation to date on this latest question raised by the AHA, regarding the contingency fee settlement component, is found in CMS’ FAQ #7 where CMS states that the matter of paying RACs their contingency fee is a contractual agreement concern.

The resulting confusion leaves the providers with a difficult question: whether to pursue or walk away from a settlement. It is like the game of Deal or No Deal, in which I know what is in box #1; it is a 68% settlement that records my appealed claims as officially denied by Medicare. Box #2 offers the alluring possibility of successful appeal and 100% reimbursement by Medicare, yet there is the unknown factor of how the ALJ will act after a settlement has been offered and then declined by the provider. Will the ALJ consider the provider greedy for going after their full earned reimbursement?  Or will the struggle and survival of the U.S. healthcare system’s acute care facilities in their role as the main source of emergency healthcare for many people and as the largest employer in many communities working through tough times be taken into account by the ALJ? All of this adds to the anxiety regarding the settlement.

Craneware continues to probe for answers to this controversial question in order to help bring clarity. Some people are wondering whether there will be any negative ramifications to RACs for taking such a strong arm approach in denying hospitals their Medicare days and no timely opportunity to appeal. There is no answer as of yet.

How do you feel about these latest developments? Would you care to speculate about what CMS’ next steps will be in response to AHA’s question and in fairness to all stakeholders? Do you think health systems will just take whatever they can get to avoid further hassle today on the past denials? If they take the line of least resistance today, what will their position be if they attempt to appeal future denials? Will the existing denials from a settlement hurt their reputations by implying they settled from error and guilt? So many questions…do you choose box #1 or box #2? Chime in here today!