No one questions the right of any payor to audit its payments to detect fraud, patterns of abuse or patterns of error.

Around $5.4 billion were returned to the Medicare coffers as a result of audits by the contractors to Medicare for these audits. But let’s dig a little deeper into this.

What if I told you the auditors get paid a percentage of what they “recover.”

Where is the incentive to detect and aid providers who are simply making administrative errors, and not practicing fraud and abuse? After all, it should be easy to follow the rules.

Have you read them recently? Bless you if you can read and understand them.

A federal bill would increase RAC accountability for inaccurate audit findings and further educate providers on to prevent inadvertent mistakes.

Here’s an example of why this legislation is badly needed:

I spoke to a practice that has been audited. It is a large practice and had more than a million dollars of claims initially denied years ago. Here are a few comments on the process.

• The same treatment for the same patient on different dates of service were both denied and approved (and not related to timing of treatment, but medical necessity).
• Appeals information has to be gathered and sent often in excess of 50 pages per appeal. It was sent, lost, resent, and then had to be sent again (despite being sent registered and certified).
• Denials that were overturned, and rebilled, did not get paid because they claimed they were billed incorrectly, despite following the letter of the policy on billing, which they enclosed.
• Two years after the initial denial, they are still waiting for some hearings to occur, all of which so far have been found in their favor.
• Treatment was denied in several episodes because the auditor did not recognize the brand name of the drug, and approved when the generic name was used in the note.
• Yes, there was one case that did not follow CMS rules, but there was a clear clinical rationale for the decision in that case, and that is pending a hearing.
• After appeals, and two years later, less than $50,000 remains in dispute. The rest was approved.

There is no penalty for inaccuracy by the auditors, with a result of a 506 percent increase in appealed claims between 2012 and 2013, causing a significant backlog.

Some hospitals are taking the approach of simply accepting settlements because the expense and delay of appealing the audits begins to exceed the loss of revenue. But these are reported as successful audits.

Same for physicians, who simply find the time, energy and effort (and time taken away from patient care) are not worth the appeal process. These are reported as successful audits, for which the auditor gets paid.

To put it another way, do you bother contesting a minor traffic infraction when the fine is less than the time and effort it would take to contest the fine?

Has this happened to you? Care to report your experience with a RAC audit? Other insurance audit? What did you do?