Medical Device Daily Washington Editor

As has been the case with the bidding program for durable medical equipment, the recovery audit contractor (RAC) program designed to tamp down on fraud, abuse and waste has been no stranger to controversy. Unlike the DME bidding program, however, the RAC program appears to be primed for action despite congressional opposition.

According to yesterday's statement by the Centers for Medicare & Medicaid Services, the program will continue its focus on "companies and individuals whose billings for Medicare services are higher than the majority of providers and suppliers in the community." CMS reported in March that it had identified more than $370 million in improper payments last year in a demonstration of the program in three states (Medical Device Daily, March 4, 2008), but the agency hopes to pinpoint billions of dollars in inappropriate payments annually by the more frequent and widespread use of RAC audits.

At least some members of the House of Representatives were less than swayed by the results, partly because almost 9% of the initial recovery actions were overturned on appeal. Lois Capps (D-California) inked a bill that would have imposed a moratorium on the program, but a flurry of more pressing concerns perhaps including the durable medical equipment competitive bidding program left Capps' effort in committee, never to see the full House floor.

The American Hospital Association (AHA; Chicago) voiced concerns that "the RACs were abusive in a lot of their behavior," according to the association's VP for policy, Don May (MDD, July 14, 2008), which he attributed in part to the payment of contingency fees as opposed to flat fees. Jerry Walters, director of financial services at CMS, countered by stating that RACs have to bid for the percentage fees they receive and have to return fees for any cases that are overturned.

CMS also reported yesterday that it will take "additional steps to fight fraud and abuse in home health agencies in Florida and suppliers of durable medical equipment, prosthetics and orthotics" in eight states, including California, New York and Illinois. The agency said that it will conduct more stringent reviews of new supplier applications and will make unannounced site visits "to double check that suppliers and home health agencies are actually in business." DME suppliers will also be subject to RAC review, the statement indicated.

Michael Reinemer, spokesman for the American Association for Homecare (AAH; Arlington, Virginia) told Medical Device Daily that the association backs the effort. "We've been working with Congress and will continue because the return on investment for this type of activity is tremendous," he said.

In a statement released late yesterday, AAH "applauded the anti-fraud efforts announced today by the federal government," taking the position "that even more must to be done to enact and enforce stricter measures to keep criminals out of Medicare." AAH also recommended that the National Supplier Clearinghouse (NSC) "conduct an additional, unannounced site visit within the first six months of operation for new home medical providers." The association is also urging Congress to fund CMS so the agency can boost "real-time monitoring of claims submitted by new providers of home medical equipment and services."

Alyssa Keefe, senior associate director of policy for AHA, told MDD that the contingency fee is still the biggest point of contention with regard to the program. "Getting the fees removed is one of our major priorities going forward," she said, although she added that members are relieved that the amount of the fees will be made public.

"We continue to try to work with the Senate to get a fix-it bill introduced" for contingency fees, Keefe said, adding that AHA members "would like to see the recovery audit contractors unable to proceed in reviews of records for medical necessity." Keefe said, "we believe they are not appropriately staffed ... to do medical necessity reviews." The term of review is another sore spot for hospitals. Keefe said "another priority is shortening the window to 12 months" for retrospective review of records.

Keefe said that H.R. 4105 had more than 100 sponsors by the time the legislative cycle had run out on the bill. "That bill has widespread support," she said, and the association is working with several members of the Senate to get a parallel bill into play next year, but "a lot depends on how the permanent program rolls out. Once that program rolls out, we'll hear from our members, which will spur renewed interest in the legislation."

NIH site covers clinical trials for kids

The National Institutes of Health announced yesterday that it has launched a web site for parents that reviews clinical trials for children and teens. The NIH statement says that the site "combines information about how clinical studies in youth are conducted with award-winning video of children, parents, and healthcare providers discussing the rewards and challenges of participating in research."

Elizabeth Nabel, MD, director of NIH's National Heart, Lung, and Blood Institute, which developed the web site, said in the statement that NIH hopes the site "will help parents and others learn more about how clinical studies are conducted in children so they can make well-informed decisions about whether to enroll their child in a study."

The site, located at, is said to have earned three Telly Awards, which go to cable television and Internet marketing and promotional efforts and video productions. The site describes why research in children is important and how studies are conducted, and was developed with the help of the New England Research Institutes (Watertown, Massachusetts) and several other organizations.