Recovery Audit Contractors
(RAC): The
Essentials
Published: 8/12/2009
1. Tax Relief
and Health Care Act of 2006, § 302, authorized
full implementation by 2010 of Medicare
post-payment audits of fee for service Part A
and B providers by four Recovery Audit
Contractors (RACs). The contracts have been
awarded.
2. RACs audit a percentage of claims based on
volume, retroactive three fiscal years from the
date the claim was paid, but not for any claims
prior to October 1, 2007.
3. The number of
records that can be audited based on provider
type are limited to:
- Home
Health, Outpatient Hospital and other Part A
billers: 1 percent of average monthly
Medicare services (maximum of 200) per
45-day period, per NPI.
- Hospice,
Inpatient Hospital, Skilled Nursing
Facility, or Inpatient Rehabilitation
Facility: 10 per cent of the average monthly
paid Medicare claims (maximum of 200) per
45-day period, per NPI.
- Physician:
depends on the size of the group,
partnership or solo practice.
- DME, Lab
and other Part B billers: 1 per cent of
average monthly paid Medicare services per
45-day period, per NPI.
RACs will not
review records that are the basis of a voluntary
disclosure accepted by Medicare. Eventually,
medical records on CD or DVD will be accepted.
4.
AUTOMATED REVIEW PROCESS
- RACs can
utilize an Automated Review, which is a
demand for repayment without reviewing your
medical records referred to as “data
mining.”
- The
overpayment determination is made without
contacting the provider for any information
on the claims denied.
- There is
no review of medical record because:
a. There
is a clear policy that is the basis for
the denial. “Clear policy” means a
statute, regulation, National Coverage
Determinations (NCD), Local Coverage
Determinations (LCD) or CMS manual, that
specifies the circumstances under which
payment for a service will always
be denied;
b. The
denial is based on a medically
unbelievable service, such as removing
two gall bladders from the same patient;
or
c.
Failure to respond to a request for
medical records within the 45 day
deadline.
5.
COMPLEX REVIEW PROCESS
- RACs will
conduct a Complex Review of requested
medical records if there is a high
probability that the service is not covered.
- The RAC
review team, which consists of RNs,
certified coders and a Medical Director,
makes coding and medical necessity
determinations based on NCD, LCD and CMS
manuals
6. RACs are paid
a contingency fee of 9 per cent to 12.5 per cent
of the amounts recouped or underpaid. RACs can
use statistical sampling and extrapolate
findings to calculate the overpayment. If the
provider wins at any level of appeal, the RAC
cannot keep the contingency fee it has been
paid, and interest may be returned under certain
circumstances.
7. Medicare
Administrator Contractors (MACs) will recoup by
offset unless provider pays by check or
commences a valid appeal. Recoupment is stayed
during first two levels of appeal,
redetermination and reconsideration; however
interest continues to accrue.
8. CMS approves
RAC audit issues and they are posted on RAC Web
sites. RAC validator contractor, Provider
Resources, Inc. of Erie, PA, works with CMS to
approve new audit issues.
9. APPEALS
a. You can
appeal the denied claims in a RAC
overpayment determination within 15 days of
a RAC demand letter by submitting a
rebuttal, and/or request a meeting,
i.e., the discussion period. This is
not part of the formal appeal process.
b. The
regular appeal process applies with
deadlines specified by regulations.
Note: 42 C.F.R. §
405.942(a)(1), § 405.962(a)(1), and §
405.1102(a)(2) state that the date of
receipt of a redetermination, a
reconsideration, or an Administrative Law
Judge (ALJ) decision, is presumed to be 5
days after the date of the notice, here the
demand letter, unless there is evidence to
the contrary.
c. The date
on the demand letter starts the 30 day
period for the MAC to send you the
recoupment letter, and the 15 day period for
you to request a discussion meeting with the
RAC. The discussion period can be longer
than 15 days, if the RAC agrees.
d. A
provider has 120 days from the date of the
demand letter to file a request for
redetermination. The MACs, Fiscal
Intermediaries (FI) and Carriers,
hereinafter referred to collectively as MAC,
can begin recoupment on the 41st day after
the date of the demand letter, unless the
MAC receives a request for redetermination
within 30 days from the
date of the demand letter (not 30 days from
the date of receipt). Note:
If the additional 5 days for mailing
applies, these timeframes may be longer.
e. If the
redetermination decision is not favorable, a
provider has 180 days to file a request for
reconsideration with the Qualified
Independent Contractor (QIC). Note:
This is the last stage to
submit additional evidence absent a showing
of good cause.
f. The MAC
can begin recoupment on the 61st day after
the unfavorable redetermination notice,
unless the provider files a request for
reconsideration within 60 days.
g. If the reconsideration decision is not
favorable, a provider has 60 days to file an
appeal to the Office of Medicare Hearings
and Appeals, ALJ level. During this level of
appeal, and any following levels of appeal
(Medicare Appeals Council and Federal
District Court), CMS will recoup the
overpayment.
h. The RAC
or CMS may decide to have an active role in
the appeal process as a “party” or
“participant.” Participation includes filing
position papers or providing testimony, but
not calling witnesses or cross examination.
CMS or the RAC may not be called as a
witness. See 42 C.F.R. § 405.1010. As a
“party” CMS or the RAC may file position
papers, provide testimony, call witnesses
and cross examine witnesses. See 42 §
405.1012
10. BEST
DEFENSE IS AN INTERNAL COMPLIANCE AUDIT
- Conduct an
internal compliance audit of applicable risk
areas, i.e. OIG, CERT reports, under the
direction of a health care attorney and
attorney client privilege.
- Correct
your billing issues before
RAC does an audit and demands a
recoupment.
-
www.cms.hhs.gov/rac;
www.oig.hhs.gov/reports.asp;
www.cms.hhs.gov/cert;
www.raclawexpert.com;
www.raclawappeals.com;
AppealsprocessflowchartAB.pdf;
www.cms.hhs.gov/MLNMattersArticles/downloads/MM6183.pdf;
11. Other
RAC Contractors:
- Region A –
Diversified Collection Services, Inc. of
Livermore, California (subcontracting some
audits to PRG-Shultz, Inc.) in
Massachusetts, Maine, New Hampshire, New
York, Rhode Island, Vermont and soon in
Connecticut, District of Columbia, Delaware,
Maryland, New Jersey and Pennsylvania.
- Region B – CGI Technologies and Solutions,
Inc. of Fairfax, Virginia (subcontracting
some audits to PRG-Shultz, Inc.) in Indiana,
Michigan, Minnesota and soon in Illinois,
Kentucky, Ohio and Wisconsin.
- Region C – Connolly Consulting Associates,
Inc. of Wilton, Connecticut (subcontracting
some audits to Viant Payment Systems, Inc.)
in Colorado, Florida, New Mexico, South
Carolina, Oklahoma, Tennessee, Texas,
Virginia, and West Virginia.
- Region D –
HealthDataInsights, Inc. of Las Vegas,
Nevada (subcontracting some audits to PRG-Shultz,
Inc.) in Arizona, Montana, North Dakota,
South Dakota, Utah, Wyoming and soon in
Arkansas, California, Hawaii, Idaho, Iowa,
Kansas, Montana, Nebraska, Nevada, Oregon
and Washington..
For more information, contact the authors listed
below or the
Arent Fox attorney with whom you usually work.
Connie A. Raffa
raffa.connie@arentfox.com
212-484-3926
Rachel Hold-Weiss
weiss.rachel@arentfox.com
212-484-3999
What are
RAC Audits
