On September 17, 2009, the Tennessee Hospital Association hosted an educational program to introduce the Recovery Audit Contractor (RAC) Program in Tennessee. Connolly Healthcare is the RAC for Region C, which includes the State of Tennessee. Representatives from the Centers for Medicare and Medicaid Services (CMS) and Connolly Healthcare presented information and answered questions.
What is a RAC ?
A RAC is a Recovery Audit Contractor. The RACs are companies that were awarded contracts by CMS to perform recovery audit services by identifying underpayments and overpayments in reimbursement. Payments to the RACs are based upon a percentage of overpayments (and underpayments) identified. (See Frequently Asked Questions on the CMS RAC website.)
Why Do We Have RACs?
The RAC Program began as a demonstration project under Section 306 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Section 302 of the Tax Relief and Healthcare Act of 2006 mandated that the RAC Program be permanent and nationwide. To illustrate the potential impact of the RACs, consider the magnitude of the overpayments collected in the demonstration project from just three states: New York, Florida and California, which had overpayments in excess of $357 million dollars. (See CMS RAC Status Document for Fiscal Year 2007.)
How Can I Prepare for a RAC Audit?
Providers in Region C can prepare for a RAC audit by reviewing the list of audit issues on Connolly's website. The audit issues must first be approved by CMS and are then addressed on the RAC website. (See www.connollyhealthcare.com/RAC
The issues currently eligible for RAC review in Region C are: Wheelchair Bundling; Urological Bundling; Clinical Social Worker Services; Blood transfusions; Untimed CPT codes; IV hydration therapy; Bronchoscopy services; Once-in-a-lifetime procedures; Pediatric codes exceeding age parameters, and Pegfilgrastim Injections.
How Do I Respond to a RAC Audit?
Providers must respond to the audit in a timely manner to preserve the right to appeal claims that are denied. Medical records must be submitted within the stated time period to avoid having the claims at issue denied.
There are two types of RAC audits: automated or complex review. The automated review process will be used for issues that CMS and the RAC have deemed are clear and do not require additional medical records for review. RACs may use automated review in situations where there is certainty that the claim contains an overpayment, such as when there is a "clear policy" that serves as the basis for the overpayment (such as a statute, regulation, National Coverage Determination, interpretive manual, or Local Coverage Determination), or a "medically unbelievable" service. (See Frequently Asked Questions on the CMS RAC website.)
The complex review process refers to issues that require additional medical records to determine billing compliance. If a complex audit is performed, the provider should have at least 45 calendar days to submit the requested records. (See Frequently Asked Questions on the CMS RAC website.)
How Can I Appeal a RAC Decision?
The method for disputing overpayments identified by a RAC is governed by the Medicare appeal process. (See Frequently Asked Questions on the CMS RAC website; 42 C.F.R. Part 405 Subpart I: Appeals-Medicare Parts A & B.) Some providers may have insurance policy benefits which may reimburse expenses associated with their audit appeal, such as attorney's fees, expert witnesses, or medical review consultants.
Responding to RAC audits and managing the appeal process requires organization and diligence. Being prepared for a RAC audit can save time and money. At a minimum, providers should consider the following as standard operating procedure:
- Conduct an internal audit to identify and correct problems before an audit begins.
- Create an audit response team to address medical records requests and monitor deadlines throughout the process.
- Respond to audits with documentation that will provide a strong foundation for subsequent appeal, and keep copies of all information submitted during the process.
This article was prepared by Diana L. Gustin and Connie S. Ditto with London & Amburn, P.C. Their practices focus primarily on health law. Questions may be directed to Ms. Ditto at firstname.lastname@example.org and Ms. Gustin at email@example.com. For more information regarding the RAC Program, see the CMS RAC website at: www.cms.hhs.gov/RAC. Disclaimer: The information contained herein is strictly informational; it is not to be construed as legal advice.