Recovery Audit Contractors are Coming: Are You Prepared?

Recovery Audit Contractors are Coming: Are You Prepared?by Thomas N. ShorterHealthcare entities in the Midwest have watched from the sidelines as the Centers for Medicare & Medicaid Services ("CMS") Recovery Audit Contractor ("RAC") program has unfolded over the last few years. No more. Healthcare entities need to be prepared to handle upcoming RAC reviews and the inevitable repayment/recoupment demand letters that will surely follow.Started in 2005 as a demonstration project by CMS, the RAC program targeted the three (3) states with the greatest Medicare expenditures: California, Florida and New York. The RAC demonstration project was authorized by the Medicare Prescription Drug, Improvement and Modernization Act of 2003. The goal of the RAC demonstration project was to test a new method for recovery of Medicare improper payments, namely the utilization of private companies operating on a contingent fee basis to indentify and recoup Medicare overpayments and underpayments. The RAC demonstration project concluded on March 27, 2008, and was declared a success by CMS that resulted in identification of $1.03 billion dollars in improper payments (96% of that amount being overpayments) over a three (3) year period.As a result of the RAC demonstration project, the Tax Relief and Healthcare Act made the RAC program permanent and required it to be fully implemented nationwide by January 10, 2010. A gradual implementation plan has been developed by CMS. It has already begun in several Upper Midwest states, including Minnesota, Michigan, Indiana, and the Dakotas, and will begin implementation August 1 in Wisconsin, Illinois, Iowa, and the remaining states not already in the program.Who is the subject to the RAC program?Medicare providers and suppliers that bill Fee-For-Service programs will be subject to RAC review. The RAC demonstration project identified improper payments related to the following services: inpatient hospital, inpatient rehabilitation, outpatient hospital, skilled nursing facility, physician, ambulance and DME.How far back can the RAC review claims?The permanent RAC program limits claim review to a maximum of a three (3) year look back period. In no case may claims paid prior to October 1, 2007 be reviewed.What is the RAC review process?The RAC review is based upon claims post-payment. The RAC uses the same payment policies as fiscal intermediaries, carriers and Medicare administrative contractors. RACs are prohibited from selecting claims at random for review. They must instead use proprietary data techniques to identify improper payments. Two (2) types of reviews may be conducted by the RAC: (1) automated (no medical record review needed); and (2) complex (medical record required).What are the medical record limits for a RAC complex review?The CMS limitation on RAC records requests for fiscal year 2009 depends upon the provider/supplier type as shown below. Failure to timely provide records will permit the RAC to deny claims for insufficient documentation and may mean the loss of appeal rights for those claims.Inpatient hospitals, inpatient rehabilitation facilities, skilled nursing facilities and hospices: Up to 10% of the average monthly Medicare claims per 45 days, but no greater than 200.Outpatient hospitals, home health and other Medicare Part A billers: 1% of the average monthly Medicare services per 45 days, but no greater than 200.Physicians: Solo Practitioner: 10 medical records per 45 days; Partnership of 2-5 individuals: 20 medical records per 45 days; Group of 6-15 individuals: 30 medical records per 45 days; Large Group (16+ individuals): 50 medical records per 45 days.Other Part B Billers (DME, Lab): 1% of average monthly Medicare services per 45 days, but no greater than 200.The timelines for challenge are short, particularly if the healthcare entity wants to prevent recoupment pending an appeal. Strategies for appealing prior to recoupment, or appealing following a recoupment are critical questions to be addressed with legal counsel, and the accrual of interest may prove to be a significant factor in such a decision. In any case, to avoid recoupment, a healthcare entity must file an appeal within thirty (30) days of the demand letter from the RAC. To preserve the right to appeal, the healthcare entity must appeal within one hundred and twenty (120) days.++++++++++++++++++++++++++++++++++++++++++Medicare audit overreach? Doctors think so, but audits aren?t going awayPhysicians decry the heavy-handed methods of Medicare?s "bounty hunters," but Congress and the White House are expanding the program nationwide.The Centers for Medicare & Medicaid Services this spring wrapped up a three-year pilot program in which "recovery audit contractors," or RACs, scoured physician and hospital claims in three states to find overpayments and to recoup those dollars for Medicare. Thrilled by the project?s financial success, lawmakers ordered CMS to expand the program to all 50 states by 2010. The agency plans to choose four national contractors to administer the program this summer. A new round of audits could start right away.Coming soonWhere the money came fromHow to be preparedSee related contentBut if Congress doesn?t delay the RAC program and make some serious changes, physicians with negative experiences worry that there will be many more stories like theirs.Jeffrey E. Kaufman, MD, a urologist in Santa Ana, Calif., was one of the first physicians whose Medicare claims were reviewed by a recovery audit contractor.Last summer, Dr. Kaufman?s practice received what he describes as a vague, "Kafka-esque" letter from Atlanta-based auditor PRG Schultz, the RAC for California. It insinuated that he had received roughly $3,000 too much for luteinizing hormone-releasing hormone agonists he administered to patients more than four years earlier. The letter demanded patient medical records to help determine if the charges were accurate.Dr. Kaufman provided the records he thought would show he was in the clear. During the time in question, the state?s Medicare carrier had not yet tightened up its "least costly alternative" policy on those drugs, so the carrier had approved larger payments than written guidelines dictated.Medicare spends about 20 cents to recover each dollar in overpayments. But following the written policy alone, PRG Schultz ruled that the physician had been overpaid. The contractor instructed the carrier to recoup the money from Dr. Kaufman or to dock his Medicare checks going forward.When the contractor failed to return his calls, Dr. Kaufman took his case to medical associations, physician advisory boards and CMS. As the deadline approached for him to make the final payment, the carrier came back with the surprising news that it had overturned the RAC and was rescinding all of the demands for overpayments on the urology drugs.Although Dr. Kaufman didn?t end up paying a nickel, his fight took countless hours of unpaid work. "This was controlling my life for about three to four months."Dr. Kaufman?s story is not unique. Physicians in California and Florida have had similar run-ins. The RAC in New York reviewed only hospital claims during the three-year pilot. Complaints often come from doctors whose specialties require them to administer drugs covered by Medicare Part B. Doctors feel the auditors have targeted these medications in search of overpayments because the drugs are expensive.Initially, contractors were paid contingency fees based on how many Medicare overpayments they dug up. After sharp criticism from the medical community, in spring 2006 CMS also began to base RAC fees on underpayments they discovered. The program has been cost effective for the government. On average, Medicare spends about 20 cents to recover each dollar in overpayments.So far, the program has focused largely on inpatient hospitals, where a single incorrect code or duplicate charge can amount to thousands if not tens of thousands of dollars.During a 3-year pilot of Medicare audits, the average overpayment per physician was $100 to $200. Over the three-year pilot, the RACs collected less than $13 million from physicians out of the $980 million in total overpayments they found, with the average overpayment per physician being about $100 to $200. The contractors found only a small fraction of underpayments, which physicians said are more difficult for auditors to discover through claims review.But for physicians who come under the gaze of the contractors, the costs to the practice can be far more than the Medicare money at stake.Marilou Terpenning, MD, a hematologist-oncologist in Santa Monica, Calif., had to respond to several rounds of medical record requests from PRG Schultz for claims involving alleged overpayment for chemotherapy. Some of the cited overpayments were as little as $13 or so per claim, but the cost to the practice of retrieving the corresponding record and forwarding the information could be 10 times that amount, she said.Tactics under fireWhenever the RAC made overpayment determinations, the physicians were forced to pay the amount in question or risk accrued interest, garnished Medicare checks or possible loss of Medicare billing privileges. Because the contractors were paid in part based on how many overpayments they found, they were soon referred to as "bounty hunters," a moniker that still persists.Physicians in California and Florida complained that the contractors used questionable tactics. They say the RACs made medical necessity determinations based on written Medicare coverage guidelines without the input of a single physician. Contractors reviewed claims that Medicare carriers already had adjudicated, misinterpreted coding statutes and went on fishing expeditions by demanding scores of records at a time. For the most part, CMS officials were powerless to review the RACs? work unless a doctor lodged an official appeal."There was no one auditing the auditors," Dr. Terpenning said.She has appealed all of the thousands of dollars in overpayment charges she received and expects to win all of them with the exception of about $250 in billing errors that she determined her office made. CMS reports that, as of March, one-third of such appeals had resulted in the overpayment determination being overturned. Many are pending.But many doctors don?t bother appealing, said Michael C. Schweitz, MD, a rheumatologist in West Palm Beach, Fla. When Las Vegas-based HealthDataInsights, the RAC for Florida, sent demand letters for alleged overpayments as low as $40, he paid rather than mount an appeal, which can take six months or longer. "When you?re talking about small dollar amounts, it becomes a business decision," he said.Ellen Evans, MD, the HealthDataInsights medical director, said in a written response that the firm followed all applicable Medicare statutes during the three-year demonstration and adhered to industry best practices that have been in place for decades. Contrary to claims that the RAC placed an undue burden on physician practices, she noted that it requested only 150 medical records to back up the more than 300 million physician claims it reviewed in Florida.HDI?s close working relationship and open communication with the doctors it reviews already has helped eliminate inefficient billing practices and ensured that more Medicare claims are paid accurately, Dr. Evans said.A PRG Schultz spokesman said the company could not comment because it is applying to be one of the national RACs when the program launches countrywide.Physicians in California and Florida acknowledged that the RACs there stopped their more aggressive tactics after doctors complained to contractors and to CMS. In addition, some doctors who protested RAC actions actually were undergoing postpayment review from different contractors and were confused about who was investigating.An unknown futureResponding to concerns about the pilot, CMS has pledged to make numerous changes when it transitions to the permanent program.The number of medical records requested from each practice will be limited, and the firms will be required to use standardized demand letters to avoid confusing doctors. Contractors will be unable to look back more than three years for overpayments, and at the outset no earlier than October 2007. If a physician or hospital appeals and has the overpayment determination overturned at any level of the process, the RAC will be required to refund its contingency fee. Before conducting a medical necessity audit, the RACs will be required to receive CMS approval.But for the American Medical Association, the American Hospital Assn. and other organizations, the proposed changes aren?t enough. The groups are pushing lawmakers to delay rollout of the permanent program for one year so more comprehensive changes can be made."The program has been extremely burdensome on affected physicians and does nothing to educate them about common billing mistakes," said AMA Board of Trustees member William A. Dolan, MD.The permanent program will focus more on schooling physicians about errors than on punishing them for it, said Timothy B. Hill, the CMS office of financial management?s director. The agency, however, has revealed few details about the extent of the education.If the program goes forward as planned, the AMA is calling for CMS to take medical necessity reviews and audits of evaluation and management services completely off the table, as well as raise the size of claims that can trigger an audit. Physicians are concerned that more doctors will be targets for review if E&M codes and claims for less than $25 are fair game.The Association also wants to prevent RACs from reviewing claims that are less than a year old because they still might be under postpayment review by Medicare carriers.Physicians who were reviewed by the RACs said they understand overpayments occur and audits can benefit the program. But giving unregulated auditors free rein to squeeze additional dollars out of practices that already are stretched to the financial limit under Medicare could force doctors into increasingly larger groups or out of the program, Dr. Terpenning said.Dr. Kaufman echoed that sentiment. "This is just one more straw on the camel?s back, and one day it?s going to be the final straw."Discuss (check for the help you need)ion Activity:What is your opininion about the Recovery Audit Contractor (RAC)?Do you think that the RAC is a fair or unfair practice to physicians, hospitals and healthcare providers? Explain your answerORDER THIS ESSAY HERE NOW AND GET A DISCOUNT !!!Category: Essay Writing

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