Recovery Audit Contractor Program

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What is a RAC?

Recovery Audit Contractor

RAC Mission

– Detect and correct past improper payments so that future improper payments can be prevented:

• Providers can avoid submitting claims not in compliance

• CMS can lower its error rate

• Taxpayers and Medicare beneficiaries are protected

RAC’s paid contingency fee

– 9% to 12.5% depending on region

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Where Did RAC’S Come

From?

Medicare Modernization Act created

t

hree year

demonstration project:

– CMS selected 3 states (NY, CA, FL) with highest Medicare utilization

– 98% of improper payments were overpayments -$980million!

– 34% of overpayment determinations were overturned on appeal

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Provider Breakdown – Demonstration

Program

84% 6% 4% 2% 1% 1% 2%

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Error Type – Demonstration Program

40%

35%

17% 8%

M edically Unnecessary Incorrectly Coded

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How do RAC’s Work?

Review claims on a post-payment basis

Use same Medicare policies as carriers, fiscal

intermediaries and MAC’s

Review claims paid after October 1, 2007

Look back three years from payment date

Staffed by nurses, therapists, coders and a

physician

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How Do RAC’s Work?

2 Types of RAC Audits

– Automated

• Claim determined at the system level

• Must be certain that the service is not covered or incorrectly coded

• Demand letter sent to provider with amount and appeal rights

– Complex

• Pursuant to letter requesting records

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How Do RAC’s Work?

Record Request Limits per 45 day period

– Based on tax ID# and first 3 digits of zip code of physical location

– 1% of ALL claims submitted the previous calendar year divided by 8 (45 day periods)

– Caps

• Through March 2010 - 200 requests per 45 day period

• April to September 2010 - 300 requests per 45 day period for providers who bill more than 100,000 claims

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How Do RAC’s Work?

Automated Review Collection Process

– Day 1

• RAC issues Demand Letter

– Day 30

• Interest begins to accrue unless payment is made

– Day 41

• Recoup by offset unless provider has paid in full or filed appeal by Day 30

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How Do RAC’s work?

Complex Review Collection Process

– RAC issues Medical Record Request Letter

• Provider has 45 calendar days to respond

– Provider submits medical records

– RAC has 60 calendar days from receipt of medical records to send Review Results Letter; if findings:

• Day 1

– RAC issues Demand Letter, includes amount and appeal rights; interest begins to accrue after 30 days from

determination unless payment is made

• Day 41

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Appeal Process

Level I – Redetermination

• 42 CFR § 405.940-58

• Fiscal Intermediary (FI)

• 120 calendar days after receiving denial letter to request

• File Appeal within 30 days to avoid recoupment

Level II – Reconsideration

• 42 CFR § 405.960-78

• Qualified Independent Contractor (QIC)

• 180 calendar days after FI decision to request

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Appeal Process

Level III – ALJ Hearing

• 42 CFR § 405.1000-64

• Administrative Law Judge (ALJ)

• 60 calendar days after QIC decision to request

– Cannot avoid recoupment

Level IV – Medicare Appeals Council

• 42 CFR § 405.1100-40

• Medicare Appeals Council (MAC)

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Appeal Process

Level V – Federal District Court

• 42 CFR § 405.1006

• Federal Judge

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What Can You Do?

Know where previous improper payments

have been found:

Demonstration findings:

www.cms.hhs.gov/rac

Permanent RAC findings: listed on each

RAC’s website

OIG reports:

www.oig.hhs.gov/reports.html

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What Can You Do?

Proactive Plan

– Notify RAC of your point of contact (POC)

– Assemble a RAC Compliance Team

– Develop a written RAC plan

• Address when to rebill and appeal

– Perform coding and medical necessity reviews

– Conduct your own “pre-RAC” audit

– Ensure you have proper documentation in file to support treatment and services

– Implement request and appeals tracking system

– Establish a mechanism for feedback/training

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What Can You Do?

Reactive

Make sure demand letter is correct

Make sure RAC has met all requirements

Understand the sampling process

Quantify the financial impact

Contact patient

Track all requests and submissions

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How Can You Learn

More?

RAC website:

www.cms.hhs.gov/RAC

RAC email: RAC@cms.hhs.gov

Region B; CGI

http://racb.cgi.com

racb@cgi.com

877-316-7222

http://racmonitor.com

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Exhibit A

Sample Patient

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Sample Patient

Communication Letter

Dear Patient,

As part of our commitment to compliance, we are continuously auditing to ensure accuracy and adherence to Medicare regulations.

On (date) we had a dispute with Medicare regarding your (service). Medicare has determined to take back the payment and therefore, we will be refunding your payment of $ (or indicate if supplemental insurance will be refunded).

If you have any questions, please call our Medicare specialist, Susan Jones, at 1-800-xxx-xxxx. We apologize for any confusion this may cause.

Thank you for allowing us to serve your health care needs.

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Exhibit B

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Exhibit C

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Exhibit D

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Exhibit E

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Figure

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References

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