March 20, 2014

Ding Dong, the RACs are Dead? Don’t Get Your Hopes Up

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The Centers for Medicare & Medicaid Services (CMS) has announced that as it enters the procurement process for the next round of RAC contracts, it is instructing the current RACs to pause their work. The announcement, which appeared on the CMS website at http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-Program/Recent_Updates.html, indicates that RACs were to stop sending post-payment audit requests on Feb. 21, 2013 (note that the instruction indicates that this was the last date the request could be sent, not the last day that it could be received). RACs have until June 1 to send files to Medicare Administrative Contractors (MACs) for payment recovery.

The announcement does not indicate what recourse a provider will have if the RAC disregards the instruction. In addition, there have been unconfirmed reports that a large number of requests were sent in the days leading up to Feb. 21. In the event that you receive a request from a RAC that was postmarked on or after Feb. 22, it is worth contacting CMS to notify them that the RAC disregarded the government’s instruction.

Is this the end of RACs? Almost certainly not. CMS is engaged in a re-procurement of RAC contractors; it is not eliminating the RAC program. Is this the end of Medicare audits? Not even close. In fact, this isn’t even a “pause” in Medicare audits; it is only a pause in RAC audits. Medicare audits are conducted by a wide range of “acronymed” entities. MACs, ZPICs (Zone Program Integrity Contractors), and BISCs (Benefit Integrity Support Centers) are just three of the contractors still conducting audits. 

RAC audits have been frustrating in part because they tend to involve a large number of records, and therefore a great deal of administrative time. However, the audits conducted by MACs/ZPICs/BISCs typically involve statistical projections and much larger sums of money. Another reason that RAC audits have been frustrating is that the position taken by the RAC often seems to be inconsistent with Medicare law. That problem is also present in audits by the other contractors. 

The pause in RAC audits is a positive development. CMS indicates in its statement that it intends to improve the RAC program. CMS is certainly well-aware of the frustration the medical industry is feeling. Whether there will be any material change in the RAC program remains to be seen, but the pause is preferable to the status quo. It would be foolish, however, to lose sight of the other types of audits. Just last week a physician I work with received a letter indicating that he would be receiving a demand for nearly $1 million based on a ZPIC audit (MACs are the contractors responsible for assessing overpayments, while the other organizations conduct audits and then send the results to the MACs, which perform the recoupment). The ZPIC had reviewed claims from 2006 through 2009 and concluded that payments were improper. The time limits on reopening claims (which will be a topic of a future article) would seem to preclude recoupment in this situation, but the ZPIC insisted that the claims may be properly reopened. 

The bottom line is that the pause in RAC audits is akin to a sun shower during a drought. It is a welcome respite, but it isn’t an end to the problem. 

About the Author

David Glaser is a shareholder in Fredrikson & Byron's Health Law Group and helped establish its Health Care Fraud & Compliance Group. David helps healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes.

Contact the Author

dglaser@fredlaw.com

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David M. Glaser, Esq.

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and is a member of the RACmonitor editorial board.

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