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The Down Low on the Healthcare Recovery Audit Contractor Program

Posted by fivebyfive on January 27, 2015

In Nashville we’re lucky to have the healthcare research and analyst firm, Obsidian Research Group as a resource. They equip healthcare companies with real time analysis of healthcare regulation so that providers can make informed decisions for their patients and businesses.

emily evans nashvilleObsidian partner and analyst, Emily Evans, advises home health providers to study up on CMS’s Recovery Audit Contractor (RAC) program. It’s a program to “identify and correct Medicare improper payments” by hiring recovery auditors to review Medicare bills and issue retroactive payment denials. In 2011, the auditors recouped $488 million from healthcare providers.

While RAC audits were an issue reserved mostly for acute providers, CMS has now created a RAC region focused solely on home health and hospice.

With that in mind, Here’s Emily’s RAC Program update:

More “Improvements” For the RAC Program

For those providers familiar with CMS’s RAC Program, know it hasn’t operated like a well-oiled machine. The opaqueness of the program has led to provider revolt, lots of political posturing and eventually congressional intervention. CMS has attempted to stem the tide with a little reverse engineering called “program improvements.” The latest of these improvements were released on New Year’s Eve and should be welcome news to many. Some of the changes relevant to the home health and hospice communities are:

  • Limits on Additional Documentation Requests –ADR will be adjusted based on the provider’s record of compliance. Providers that get few improper payment determinations will get fewer ADRs. CMS will be shortening the RACs timeframe for complex reviews. The current period is 60 days. Effective with the new contracts, RACs will have to complete complex reviews within 30 days. Complex reviews involve a review of the medical record by a qualified and credential person.
  • Payment of RAC fee – Under the original RAC program, the contingency fee for the payment recovery was paid by CMS after the first level of appeal, which is the reconsideration by the Medicare Administrative Contractor or MAC. When CMS advertised the new contracts in early 2014, they indicated that, in the future, CMS will pay the contingency fee after the second level of appeal before the Qualified Independent Contractor.
  • Auditing accuracy – CMS has evaluated the RACs accuracy since the beginning of the program. However, they have not imposed any acceptable thresholds. Recovery auditors under the new contracts beginning with the recently awarded Region 5 will be subject to two limits. RACs will be required to maintain an overturn rate of less than 10 percent at the first (MAC) level of appeal and an auditing accuracy rate of 95 percent.
  • Other Changes – CMS is also mandating certain changes that should NOT have a material economic impact on the RACs but should nonetheless improve the process and limit provider angst. These changes include a standardization of information on RAC website, required responses to provider inquiries, and the appointment of a Provider Relations Coordinator.

Topics: Healthcare Industry


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