Updated on: June 22, 2012

Burning Questions for Hospitals Regarding RACs Part 2: The Determination

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Original story posted on: June 10, 2009
cengle120xBy: Carla Engle, MBA


In several recent communications from the AHA and the RACs themselves during provider outreach sessions, providers are being offered clarification on exactly how RAC review determinations are going to be conveyed.

In a member advisory issued April 20, the AHA offered the following under "Medicare Recovery Audit Contractors (RACs): Permanent Program Basics" on how the review results letters and demand letters will notify providers of the determination and collection process.


"The determination process for the RAC has not changed," according to Connie Leonard, director of the Division of Recovery Audit Contracting for CMS/OFM. "There has been a lot of confusion surrounding the discussion period and we are attempting to provide clarification to providers." The term "review results" often are used now in place of "determination," as "review results" just are simpler to understand. It is still a determination of the review (an underpayment, overpayment or no finding).

For an automated claim review:


The provider will be issued only a demand letter; there is no review results letter. The discussion period is from Day 1 (from the date of the demand letter) through Day 41.


A RAC is required to communicate to a provider the results of each automated review that invokes an overpayment determination, including the coverage/coding/payment policy/article that was violated. In the case of an automated review that results in an overpayment, the provider will receive a demand letter that communicates the finding of one. This letter may contain a list of claims denied for the same reason. The provider will not know that the RAC is looking at a particular claim until the time that a demand letter is sent, as no medical record was requested. However, a provider will know that the issue was approved for wide-scale automated review by CMS because it will be posted on the RAC's Web site.

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The demand letter will come directly from the RAC and will contain the following information:

  • The amount of the denial
  • The method for calculating the denial
  • The reason the original payment was incorrect
  • The regulatory and statutory basis for the denial
  • The providers' option to submit a rebuttal statement (described in the AHA Medicare appeals advisory, available at http://www.aha.org/aha/advisory/2009/090327-regulatory-adv.pdf
  • The providers' appeal rights, which are separate from the rebuttal process
  • The recoupment, payment and interest options for the provider and the associated timelines.

 


CMS currently is updating and reviewing the language for the RAC demand letters. When the letters are finalized, CMS has indicated that it will share them with the AHA.

A sample demand letter was included in the May 28 AHA member advisory.

 

For a complex claim review:


In a complex review, where medical records and/or additional documentation are requested and reviewed, the provider always will receive written notification of the outcome of the review - commonly called the review results letter. This is sent to the provider within 60 days of the RAC receiving records from it. The discussion period begins with the provider receiving the review results letter and does not end until recoupment would begin (41 days after the provider receives the demand letter). At this time the review results letter and the demand letter are two separate letters.


A RAC is required to communicate to a provider the result of each complex review that identifies an overpayment determination, including the coverage/coding/payment policy or article that was violated. The RAC also must inform the provider of cases in which no improper payment was identified. For complex reviews in which an overpayment has NOT been identified, the provider will be notified of the non-finding in a review results letter. If no overpayment is found, there will be no further action on the claim. This concludes the review by the RAC for that particular claim.


For complex reviews in which an overpayment has been identified, there will be two communications from the RAC. The first is the review results letter, which, issued on a claim-by-claim basis, notifies the provider of the overpayment. The second is the demand letter.


For complex reviews, regardless of the finding, the RAC must send a review results letter to the provider within 60 calendar days of receipt of medical records (or within 60 days of the exit conference, required to be conducted at the end of provider on-site reviews) unless CMS grants an extension.

burn-chart2-060909

The review results letter must include:

 

  • Identification of the provider
  • The reason for conducting the review
  • A narrative description of the improper payment (if identified), stating the specific issues involved that created the improper payment and any pertinent issues
  • The findings for the claim including a specific explanation of why any services were determined not to be covered, incorrectly coded, etc.

CMS has worked to standardize all review results letters to be issued by the RACs. These letters still are under review at CMS. When they become available, the AHA will post these letters to its Web site.


Subsequent to the review results letter that notifies a provider that an overpayment has been identified as part of a complex review, the RAC will send a follow-up demand letter to the provider. The time between the review results letter and the demand letter may be only a matter of days. Eventually, CMS hopes that the review results letter and demand letter will be rolled into one communication. However, due to the need for communication between the RACs and the Medicare claims processing contractors, the communications will be separate. The demand letter will come directly from the RAC and will contain the following information:

  • The amount of the denial
  • The method for calculating the denial
  • The provider's option to submit a rebuttal statement (described in the AHA Medicare appeals advisory guidelines, available at http://www.aha.org/aha/advisory/2009/090327-regulatory-adv.pdf
  • The provider's appeal rights, which are separate from the rebuttal process
  • The recoupment, payment and interest options for the provider and the associated timelines.


How do these two forms of communication play into the discussion period?


Each RAC will offer providers a "period of discussion" for all denied claims. During the discussion period, the provider may provide additional information or documentation to the RAC for its consideration. For example, if the claim was denied due to missing documentation in the medical record that would have justified the services rendered, the provider may submit that information to the RAC. In addition, the discussion period may be used by the provider to further discuss the finding with the RAC.

 

  • The discussion period is NOT part of the formal Medicare appeals process.
  • Engaging in the discussion period does NOT necessarily preclude recoupment by the RAC for an overpayment it has identified. Only qualifying formal appeals may postpone recoupment.
  • The appeals clock is not put on hold during the discussion period and will run from the date of the demand letter. For example, if a provider wishes to stop recoupment, it should simultaneously file an appeal with the FI/MAC at the same time it is discussing the matter with the RAC.
  • The discussion period starts at different times depending on whether or not the review was automated or complex.
    • For automated reviews, the discussion period begins with the notification of an overpayment via the demand letter from the RAC.
      • To discuss the matter further, CMS advises the provider to contact the RAC within 15 calendar days of the date of the demand letter.
    • For complex reviews, the discussion period begins with the notification of an overpayment via the review results letter from the RAC.
      • To discuss the matter further, CMS advises the provider to contact the RAC within 15 calendar days of the date of the review results letter.
      • Entering into a "discussion" with the RAC may not prevent a demand letter from being issued if an overpayment was identified. Once the demand letter is issued, the timeline for a Medicare appeal will start five calendar days after its date.


In the AHA Recovery Audit Contractor program update on May 28, CMS further clarified that providers will have the option on complex reviews to use the RAC discussion period from the date of the RAC review results letter through the date of overpayment recoupment - 41 days following the date of the demand letter - rather than only through the issuance of the demand letter.


As the process continues to be refined by CMS and the RACs and clarification is offered by the AHA, we will continue to post updates to help you define your own internal workflow.

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About the Author
Carla Engle, MBA, Product Manager


Carla's background includes more than 20 years in hospital and physician practice operations, particularly in reimbursement and billing functions. Prior to joining Wolters Kluwer recently, she was vice president of compliance for a national revenue cycle solutions company, and prior to that she was in the Reimbursement Training Department with HCA. For several years she headed up the Part A Fraud Investigation Unit for a CMS Program Safeguard Contractor (PSC) where she was successful in the prosecution of several national cases. In her revenue cycle compliance capacity, she worked with a number of clients in California and Florida with Recovery Audit Contractors (RACs) in setting up processes and appeals.

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