RAC Training: Review the CMS RAC Audit Program


One thing that you as a hospital or a physician or a clinic or a home health agency, you must accept is that number one, RAC contractors are going to come. And yes, they will come to you period. And yes, they are going to demand recoupment for overpayments. You should anticipate that. That is going to happen. Even though you've probably done your very best to follow all the rules and regulations and all of the claims, filing, transaction standards and everything else, you have to accept the fact that they indeed are coming.

All right, this is a Medicare program. The national RAC auditors that we have today do have to meet certain standards. They have to have a medical director. And they have to have at least some certified coders, et cetera. But they're going to be doing a whole bunch of things. And we can question whether they really have the expertise to do all of the things they're doing but that's totally a separate issue.

What techniques do the contractors use?

Now, we are going to talk about three techniques.

1) Automated reviews: You can call it data mining. This is where they go out and look at your claims. They call through all claims looking for aberrations, looking for things that don't look quite right.

For instance - and we are sure all hospitals have done this from time to time, the CPT code for blood transfusion 36430. And the guidance from CMS seems to be a little bit conflicting. But for all practical purposes, we have to accept the fact that Medicare guidelines require us to use 36430 once per day. Even though you may have two separate encounters for blood transfusion, they only want you to use it once per day.

So, one of the things that the RACs will look for in their automated reviews is the fact that 36430 appears more than once on a given date of service as per healthcare guidelines. And then they will send that to you and say, “Nope, we paid you for two of these and it should have only been one” even though there might have two encounters. And maybe you could even appeal that but it would be worth appealing it as such, but those are the kinds of automated reviews.

2) Technical reviews: RAC contractors will pick up things. There's no question about it. They will pick up things. Now, the second level is where they actually start doing technical reviews. They start reviewing charts. They start looking for medical necessity. They look for the sufficiency of the documentation.
Now, you will notice that in these types of reviews, most of the issues that are involved are subjective to everyone. They're subjective. And this leads to some very real problems. And this is where we're going to generally use the appeals process is in these subjective areas particularly medical necessity.

3) Extrapolation: If you are subjected to some sort of an extrapolation process - and right now, we can't tell you whether that's a high probability or not. But if you are, then we would suggest that you're going to want to consider very carefully an appeals process and exactly how you're going to appeal that. It still remains to be a question because you could be dealing be thousands of cases. And you certainly can't appeal every one of them individually as per healthcare rules.

Are there other folks out there doing similar things?

And the answer is, “Yes.” We, the FIs and the carriers still have the Comprehensive Error Rate Testing program. It's still out there. It's still alive. It's still being done. It's just being done on a much smaller scale.

Now, the good news is that as you encounter these other programs, particularly at the Medicare level, claims that are subjected to review under some other i.e. non-RAC process will be excluded from the RAC consideration. So, that's the good news. But you're going to see Medicaid programs doing this. And other large private third party payers are going to be doing things that are similar.

Are they looking only for overpayments?

Well, the official answer is - everyone, the official answer is, “No.” They're also looking for underpayments, okay. Now, if you go back in and look at the statistics, what you're going to discover, not too surprisingly, is that the percentage of underpayments they have found is a relatively small single digit number. All of the rest have been overpayments. So for all practical purposes, we can accept the fact that they're mainly looking for overpayments, everyone, suggested our expert in a healthcare webinar.

What if you disagree?

There are going to be many instances over the coming four or five, six years that you are going to disagree. You're going to disagree and there is an appeals process. It's not significantly different from the normal Medicare appeals process. There are some added or different features. But you're going to want to appeal.

Now, the question becomes immediately, is it worthwhile appealing, which involves a couple of things -- number one, what is the amount that is being contested; and number two, how solid is the ground.

Medicare's secondary program, where does it fit in? Well, it's a separate program. Yes, they're out there looking at MSP as well but that's a little separate from the RACs per se.

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