RACs Ready to Rack Up Improper Payments

BALTIMORE — CMS held a Special Open Door Forum Thursday to introduce
its new Recovery Audit Contractors, tabbed in October to ferret out
Medicare overpayments and underpayments. The RACs will be paid a
contingency fee based on the amount of the improper payments they
correct.

While providers have questioned CMS’ payment method for the
RACs, agency official Connie Leonard said the contractors will be
evaluated on customer service, and that there is “no quota per se
that they have to meet in order to maintain their contracts.”

The new audit program will be in place nationwide by Jan. 1,
2010, even though protests filed by two unsuccessful RAC contract
bidders have put it on hold for now (see “RAC Outreach Halted as GAO Probes
Contract Protests“, HomeCare Monday, Nov. 10), an
official said, noting the Government Accountability Office has
until approximately mid-February to issue a decision on the
protests.

In a three-year demonstration in six states—California,
Florida, New York, Massachusetts, South Carolina and
Arizona—CMS gave the RACs $317 billion in paid claims data on
which more than $900 million in overpayments was collected and $37
million found in underpayments.

Those results propelled the agency to implement permanent RACs
in areas that match the four DME MAC jurisdictions, and the
post-payment review program will eventually roll out to all 50
states.

The permanent RACs will begin working in the following
states:

• Diversified Collection Services of Livermore, Calif.,
  in Region A, initially working in Maine, New Hampshire, Vermont,
  Massachusetts, Rhode Island and New York;
• CGI Technologies
  and Solutions of Fairfax, Va., in Region B, initially working
  in Michigan, Indiana and Minnesota;
• Connolly Consulting Assoc. of Wilton, Conn., in Region
  C, initially working in South Carolina, Florida, Colorado and New
  Mexico; and
• HealthDataInsights of Las Vegas, Nev., in Region D,
  initially working in Montana, Wyoming, North Dakota, South Dakota,
  Utah and Arizona.

Additional states will be added to each RAC region in 2009.

“The program mission has been and always will be to protect and
correct past improper payments so that CMS can implement action
that will prevent future improper payment,” said Ebony Brandon, a
project officer for RAC Region A. She and CMS official Gia Lawrence
gave the following information about the new RACs:

• The “maximum look-back date” for the permanent RACs is Oct. 1,
  2007.
• The RACs will choose areas of focus based on their own
  data-mining techniques, so they could use OIG, GAO and CERT reports
  in order to determine what kinds of claims to review.
• There are two types of review: “automated” and “complex.” An
  automated review does not require a medical record, where a complex
  review requires the RAC to request medical records from the
  provider, and then to review those records within 60 days. A
  provider’s failure to submit the records within 45 days will result
  in an automatic denial.
• New issues for review will be posted to each region’s RAC Web
  site, although CMS is still working with the RACs on medical
  records limits, which if changed, will be posted to the Web
  sites.
• The RACS will use the same medical policies as the MACs:
  national and local coverage determinations and CMS manuals. They
  are also required to use the same type of staff as the MACs,
  including nurses, therapists, a full-time physician medical
  director and a certified coder.
• Some examples of improper payments the RACs will be looking for
  include medically unnecessary services, incorrect coding and
  duplicate claims.
• Each RAC will offer a “period of discussion” to providers if an
  improper payment is found. For an automated review, the period
  begins when the provider receives a demand letter. For a complex
  review, discussion begins with a review results letter. During the
  discussion period, providers can furnish more information to
  support their claims; however, the discussion period ends on the
  day of recoupment.
• Providers who receive RAC demand letters can either: allow
  recoupment, pay by check, file an appeal or sign up for an extended
  payment plan. If a provider appeals a finding and the RAC loses the
  appeal, it must return the contingency fee.

What can you do to prepare? According to Lawrence:

“See what improper payments were found by the RAC in the
demonstration … Also, you can conduct internal assessments
within your own facility … to identify if you are compliant
with Medicare rules. You might want to think about providing
in-services or refreshers to your staff” on issues such as correct
coding and making sure the correct diagnosis is listed on all
claims.

In addition, Lawrence said, make sure the RAC has the right
address and contact information for your company, check on the
status of medical records and “keep track of any denied claims,
look for patterns and determine what action you need to take.”

For more information on the permanent RAC program, a map of
future RAC expansion and a report on the three-year RAC
demonstration, see the RAC Web site.

On Nov. 20, CMS will post an audio recording of the
teleconference, which also included a host of questions from the
audience of 860 listeners, to the Special
Open Door Forum Web site. The recording will be available for
30 days.