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From our Health Care Practice Group: How To Prepare for RAC's

06/11/2009

Preparing for RAC's

 

The nationwide rollout of the permanent RAC Program is underway. Providers in all 50 states should be prepared for the newest effort by CMS to identify improper Medicare payments and fight fraud, waste and abuse in the Medicare program. It is important for providers to educate themselves regarding the RAC Program and to seek assistance when faced with a RAC audit.

What is a RAC?

A Recovery Audit Contractor (“RAC”) is a CMS contractor tasked with identifying improper Medicare payments. The RAC Program’s mission is to reduce Medicare improper payments through the efficient detection and collection of overpayments, the identification of underpayments, and the implementation of actions that will prevent future improper payments. RACs are paid on a contingency fee basis and are utilized throughout the healthcare industry.

What does a RAC do?

RACs review claims on a post-payment basis. RACs will be able to look back 3 years from the date that a claim is paid. RACs will not be able to review claims paid prior to October 1, 2007. There are two types of RAC review: automated (no medical record review required) and complex (medical records will be reviewed by the RAC). RACs are required to employ a staff consisting of nurses, therapists, certified coders, and a physician.

What is different about the RAC Program?

The RAC Program will be very similar to the current post-payment audit process used by FIs, MACs and Carriers. Under the RAC Program, however, the demand letter will be issued by the RAC. The RAC Program will simply be more extensive and more targeted toward specific problem areas identified by Medicare. Additionally, the RAC will offer an opportunity for the provider to discuss the improper payment determination with the RAC (this is outside the normal appeal process). Issues reviewed by the RAC will be approved by CMS and posted to the RAC website prior to widespread review.

What are a provider’s options?

If a provider agrees with the RAC determination, a provider can pay by check, allow recoupment from future payments or request an extended payment plan. If a provider disagrees with the RAC determination, a provider can participate in the 15 day discussion period offered by each RAC. During this discussion period, a provider can provide additional information and documentation to the RAC. Additionally a provider can appeal the RAC determination. The appeal process will be the same process as the current Medicare reimbursement appeal process.

When will the RAC Program affect me?

The Tax Relief and Health Care Act of 2006 required a permanent and nationwide RAC program by no later than 2010. CMS established a National Expansion Schedule for the RAC Program which divided up the country into Regions A, B, C and D. CMS has already implemented the RAC Program in portions of Regions A, B, C and D. The final phase of the RAC implementation is currently scheduled to occur by August 1, 2009 or later. Alabama, Georgia, Mississippi, Tennessee and Louisiana are among the states that are in the final phase of the RAC implementation.

What can a provider do to get ready?

1. Know where previous improper payments have been found. RAC findings of improper payments will be listed on the RAC websites. Also, look to see what types of improper payments have been found in OIG and CERT reports.

2. Prepare to respond to RAC medical record requests. Make sure the RAC has the precise address and contact person for sending medical record request letters. When necessary, check on the status of the medical record request on the RAC websites.

3. Appeal when necessary. Do not confuse the RAC discussion period with the appeals process. An appeal of a RAC determination must be filed before the 120th day after the RAC demand letter. In some cases, an appeal must be filed earlier in order to prevent recoupment.

4. Learn from past experiences. Keep track of denied claims and look for patterns. Determine what corrective actions are needed to avoid future improper payments.

 

Our Health Care Group has extensive experience with handling Medicare reimbursement appeals. For assistance with a RAC audit or other healthcare issues, contact David M. Hunt, Esq. chairman of our Health Care Group, or any of the other attorneys in our Health Care Group.


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