Recovery Audit Contractors (RACs) and Medicare
11/05/2009
What is a RAC?
RAC stands for Recovery Audit Contractor. It is an independent review organization hired by CMS to “detect and correct past improper payments so that CMS and Carriers, FIs, and MACs can implement actions that will prevent future improper payments.” Their goal is to help providers avoid submitting claims that do not comply with Medicare rules, assist CMS to lower its error rate and make sure that taxpayers and future Medicare beneficiaries are protected.
Will the RACs affect me?
Yes, if you bill fee-for-service programs, your claims will be subject to review by the RACs.
When?
The goal is to have the program operational in all 50 states by 2010. The expansion schedule can be viewed at: www.cms.hhs.gov/rac.
RAC Legislation
Two pieces of legislation define and enable the establishment of RACs. First, the Medicare Modernization Act, Section 306 required the three year RAC demonstration project. Second, the Tax Relief and Healthcare Act of 2006, Section 302 requires that a permanent and nationwide RAC program be in place by no later than 2010. Both Statutes gave CMS the authority to pay the RACs on a contingency fee basis.
What does a RAC do?
RACs review Medicare claims on a post-payment basis. They use the same Medicare policies as Carriers, FI’s and MACs: NCDs, LCDs (National Coverage Decision and Local Coverage Decisions) and CMS Manuals.
They do two types of review. An automated review can be performed in which no medical record needed. The other is a Complex Review where the patient medical record is required.
An important change in the process is that now RACs will not be able to review claims paid prior to October 1, 2007. In the past, some providers in California had records paid as far back as four and five years prior requested for review. Now RACs will be able to look back three years from the date the claim was paid.
RACs are required to employ professional staff with expertise in the areas being reviewed. This was not always true in the past. They must have a staff consisting of nurses, therapists, certified coders, and physician CMD (Medical Director).
The Collection Process
The collection process is the same as for Carrier, FI and MAC identified overpayments (except the demand letter comes from the RAC). Carriers, FIs and MACs issue the Remittance Advice. The Carrier/FI/MAC recoups by offset, unless provider has submitted a check or a valid appeal.
Once the Demand letter is issued by the RAC it will offer an opportunity for the provider to discuss the improper payment determination with the RAC (this is outside the normal appeal process).
We will have advance knowledge of what issues RACs will be reviewing. Issues reviewed by the RAC will be approved by CMS prior to widespread review. These Approved Issues will be communicated by Axiom before widespread release.
The current Issues Approved by CMS:
· Billing of Excessive Units of Untimed Codes
· Billing for Excessive Units of Blood Transfusions
· Billing Excessive Units of IV Hydration
What are the providers’ options?
We will discuss this and more in our next issue. In the meantime if you have questions or are faced with a Medical Records Request by HealthDataInsights, please call us at (916) 786-3582.
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