Recovery Audit Contractor (RAC) Overpayments – Protecting Today’s Medicare Claims for Tomorrow’s Audit
The following PYA Alert is the first release in a series on the topic of Recovery Audit Contractors (RACs) and therefore offers more information than our traditional PYA Alerts.
Following the March 2008 conclusion of the 3-year RAC demonstration project, or “demo”, the Centers for Medicare & Medicaid Services (CMS) is expanding the RACs to the national level by 2010. The demo states included Florida, New York, and California, representing the three largest states in terms of Medicare utilization. An estimated $371 million in improper payments were identified and corrected by the RACs during FY 2007 for the demo states alone, as outlined in the “CMS RAC Status Document FY 2007.” Approximately 85% of the overpayments collected by the RACs were from inpatient hospitals, and almost half of improper payments were the result of incorrect coding. The cost of operating the RAC program is reported as only 22 cents for each dollar returned to the Federal Trust Funds, so it is easy to understand why CMS is “nationalizing” these efforts.
Providers can begin to proactively assess potential risk areas and implement mechanisms to protect the strength and integrity of its future Medicare claims – starting now. The end of the 3-year demo launches several changes for the upcoming national initiative. One of these changes is that the RACs cannot request claims older than October 1, 2007, whereas there was no maximum “look back” period during the demo. This means that the claims being billed today are subject to RAC review, and represent a prime opportunity for pre-emptive corrective action.
Providers should be preparing themselves for RAC audits today. The following strategies should be considered as each organization develops its plan:
- Review CMS documents about the RAC demo to determine potential risk areas
- Ensure that organizational leadership, physicians, compliance committee members, and possible targeted departments are educated about RAC activities, as well as potential impact
- Develop a multidisciplinary RAC task force, which may be an ad-hoc group to the Compliance Committee, with focused roles and responsibilities to include:
- Proactive audits, performed internally or through an external resource
- Analysis of perceived vulnerabilities through audits and review of other supporting organizational data
- Corrective action as indicated with visible administrative support
- Development of a plan with internal processes for tracking:
- Timely receipt and correct routing of RAC medical record requests to the appropriate individual
- Timely processing of RAC medical record requests following receipt for response within the designated time frame
- Outcomes from RAC reviews and determinations (including those from audits referenced above)
- Appeals processes and status following RAC determinations
- Ensure that perceived vulnerabilities are effectively corrected to protect future Medicare reimbursement
PYA’s team of Clinical Compliance and Reimbursement professionals can help 1) assess your risk for billing and coding compliance, 2) identify areas of potential overpayment risk, 3) realize process improvement opportunities and 4) educate your staff to ensure compliance within your organization.
For more information about our RAC preparedness services, please contact the experts listed below at (800) 270-9629 or visit our website.
The information provided via PYA Alert, Tax Planning Alert, or Audit and Accounting Alert should not be construed as accounting, auditing, consulting, or legal advice on any specific facts or circumstances. The contents are intended for general information purposes only. Please contact us at (800) 270-9629 to discuss your specific situation or to discuss any specific questions you may have
