The Recovery Audit Contractor (RAC) program is going to get much bigger, according to a CMS proposed rule. RAC auditors in your state will start scrutinizing Medicaid claims by 2011. 

The health care reform law, the Affordable Care Act, mandates that states have Medicaid RAC contractors operating by Dec. 31. The Medicaid RACs will operate just like Medicare RACs. They will be paid to review provider claims, identify overpayments and recover money. The RACs can also look for underpayments, but that is left to the state's discretion.

"Reducing improper payments is a key goal of the [Obama administration], and the tools provided by the Affordable Care Act will help us achieve that goal," said CMS Administrator Donald Berwick, MD, in a statement about the proposed rule. "We are using many of the lessons that we learned from the Medicare RAC program in the development and implementation of the Medicaid RACs, including a far-reaching education effort for health care providers and state managers."

"As we are making our case to the public, we can also take concrete steps to lay the groundwork for bigger reform, including reworking the budget process and addressing, in a fiscally responsible manner, near-term funding issues, such as Medicare reimbursement policies."

Those are the words of Rep. Eric Cantor (R-Va.), the minority whip in the House of Representatives. They appear on page six of his 22-page "Delivering on Our Commitment: A Majority to Limit Government and Create Jobs." Cantor is running for GOP majority leader and the document outlines how Republicans would legislate under his command.

He makes a few other mentions of the Medicare program, but doesn't provide much detail. However, it is noteworthy that Cantor singles out Medicare reimbursement and believes it needs to be addressed. Perhaps, the next Congress will make payment reform a priority?

CMS finalized the 2011 Medicare Physician Fee Schedule -- and the outlook is not good for your practice next year. The conversion factor used to calculate Medicare payments in 2011 will be $25.5217, down a staggering 30.78% from the current rate of $36.8729.

To give you a quick example of how that impacts you, national payment for 99213, the most commonly billed code, would drop to an estimated $51.81 from the current $66.74, according to the fee schedule.

Today is Election Day, so a lame duck session of Congress will need to do two things - act before Dec. 1 to delay a 23% cut, then again by Jan. 1 to stop an additional 7% cut. Otherwise, your Medicare reimbursements will drop 30% next year. The AMA and other physician associations are lobbying for a temporary payment fix, with the hope that the next Congress will permanently fix the reimbursement formula next year.

AMA President Cecil Wilson, MD, outlined to Kaiser Health News the AMA's plan for lobbying Congress to delay scheduled cuts to Medicare reimbursements on Dec. 1 and Jan. 1. The AMA and other physician groups will need the cooperation of a lame duck session of Congress to prevent a 30% decrease in payments over the next couple months.

"Our strategy is to say to Congress, 'What we want from you is to stabilize Medicare payments to physicians for the next 13 months to get us through 2011,'" Dr. Wilson says. "And then that will give us an opportunity working with the new Congress to develop a means of getting rid of the formula, putting in a formula or a payment mechanism that recognizes increased costs of care."

This is the same strategy the AMA has employed for awhile now and it hasn't work. The sustainable growth rate (SGR) budgetary mechanism responsible for the cuts has been a problem for years. Permanently fixing the formula will now cost $276 billion and would be difficult for budget hawks in Congress to offset.

Click here for more on SGR cuts

You can expect the finalized 2011 Medicare Physician Fee Schedule to be out any day now. Be sure to check back with www.partbnews.com to get the latest news and analysis of the new fee schedule when it's released.

Also, check out our webinar "New Billing Opportunities under the 2011 Medicare Physician Fee Schedule" with Betsy Nicoletti, CPC, on Nov. 17. You only have a few weeks to update your coding and comply with new billing rules, so let Betsy help you understand how the finalized rule impacts your practice.