AMA push against Medicare recovery audit overreach

A guest column by the American Medical Association, exclusive to

The Centers for Medicare and Medicaid Services (CMS) has pushed back the April 1 deadline for states to implement their Medicaid recovery audit contractor (RAC) programs until an unspecified time later this year. The implementation delay was welcomed by the American Medical Association (AMA) and other national physician organizations who have vocally urged CMS to improve its proposed Medicaid RAC program.

Under the program, state Medicaid plans contract with RACs to identify and recoup overpayment and underpayment of fees to physicians and other health care professionals. CMS issued an informational bulletin on Feb. 1 announcing it would delay the program’s implementation date.

CMS’ action comes on the heels of an AMA letter to CMS Administrator Donald Berwick, M.D. The letter, which was co-signed by medical societies representing more than two dozen medical specialties and all 50 states and the District of Columbia, registered physicians’ deep concerns with the excessive administrative and logistic burden of complying with a program that embraces bounty hunter payments.

“We continue to have concerns about the perverse incentive structure and burdensome nature of the Medicare recovery audit contractor program and firmly believe that the best way to reduce improper coding is through education and outreach,” says the letter.

The organizations urge CMS to look at improvements made in the Medicare RAC program during the rule-making process and consider similar changes for the Medicaid RAC program.

Due to considerable advocacy by the AMA, CMS made several changes to the Medicare RAC program by:

  • shortening the retrospective time period of audits,
  • documenting good cause for claims review,
  • adding a physician medical director to each RAC,
  • capping the number of medical record requests,
  • requiring RACs to use certified coders, and
  • establishing websites for each RAC to share timely and transparent information.

While CMS has incorporated many of our requested changes, there are many others that remain and the AMA continues to press CMS to make further program improvements.

Despite the delayed Medicaid RAC program, private insurance companies have taken note of audit recovery. Anthem and Humana are starting to perform similar audits of hospitals and physicians. It’s certain that more private insurers will put similar programs into place.

Consultants say the best way to avoid audit recovery is to analyze coding and billing practices, but the majority of physician practices are small and can not afford to spend limited resources on expert financial services and advice.

The AMA can help physicians prevent all types of payer audits with a powerful tool that offers affordable financial analysis of billing data. AMA PATH – the AMA’s Practice Analysis Tools for Healthcare – puts self-auditing tools in the hands of physicians; allowing medical practices to gauge coding and billing practice against benchmark data that were typically only available through expensive consultants.

AMA PATH gives physicians an efficient tool for reviewing their practice in a whole new way with resources that:

  • anticipate how a medical practice might look to an auditor,
  • analyze a medical practice’s use of modifier and procedure codes,
  • examine coding and billing patterns for an individual physician or a group of physicians, and compare results to national averages by specialty, and
  • generate reports to pinpoint how a medical practice can improve its coding process.

Supporting physicians with innovative tools that reduce the administrative burden of practicing medicine is a top priority for the AMA. To learn more about AMA PATH, please visit

Cecil B. Wilson is President of the American Medical Association.

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  • Mark

    Or, just stop taking medicaid.

  • Dr. J

    Let me get this straight, for the privilege of accepting payments that barely meet the costs of running a practice you can now expect to be audited with any discrepancy sold to collectors?
    Why does anyone accept insurance? Why not bill the patient directly and let them try to recover from their own insurance company? I know this would cut out patients without access to cash or credit, but from the standpoint of an individual doctor this would seem to be the only way to go in terms of practice..

  • paul

    how does one “recoup underpayment” exactly?

  • Smart Doc


    My super-lucrative Medicaid income will be foiled by these upstanding, honest RAC companies, one big player of which is owned by US Senator Feinstein from California.

    Looks like my days of easy big, big money from Medicaid are drawing to a close.

    • Vox Rusticus

      (Must be said after waxing moustache and while rubbing hands together.)

  • Marc Gorayeb, MD

    If you were really concerned about your fellow physicians, instead of getting in bed with the government in its nefarious plans, wouldn’t you instead lobby hard to scrap the entire idea of a government-sanctioned private bounty hunting industry? If you really want to help the government eliminate fraud, then shouldn’t you try to convince the government to eliminate the system that encourages it?
    I’m all in favor of small government, but farming out government’s enforcement duties is an abdication of its central function. Only salaried government employees should be charged with enforcing its laws, persons who are directly answerable to the Dept. of Justice, and who are not motivated by financial gain. Private bounty hunters operating with the imprimatur of the federal government is the worst of all possible bureaucratic worlds.
    The AMA should be lobbying hard to kill this bounty-hunting industry in its infancy, before it visits enormous and widespread pain on the medical profession.

    • Vox Rusticus

      I recommend the book “Are We Rome?”. Cullen Murphy, its author, speaks to this very phenomenon of the privatization of the central duties of government as a common feature of a government and society in decline.

  • RadicalMD

    Drop all insurance plans now or regret it later. Remember, you’ve been warned!!

  • Leo Holm MD

    The AMA participates in several structures which increase the administrative burden to physicians and also contribute to the “perverse incentive structure” noted above. We could have a much simpler coding environment (i.e. small, medium, large) and less ambiguity for there to be any confusion about. One of the reasons “fraud” occurs is because of the nebulous billing and coding system.

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