May 2, 2013

New ADR Limits Good News for Providers

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April 15 is typically a day of dread for many U.S. taxpayers. This year, however, it's a day for celebration among providers participating in Medicare's fee-for-service RAC program. Beginning April 15, 2013, additional documentation request (ADR) limits for the RAC program are essentially reduced for Medicare providers (excluding suppliers and physicians).

Prior to April 15, RACs could select up to 100 percent of any claim type for review. Now they are limited to a maximum of 75 percent on any particular claim type. When combined with the maximum number of ADRs and percent of claims limitations, providers should see a reduction in requests for the most burdensome of RAC audits—acute hospital inpatient (IPPS) stays.

More variability in the type of requests may equate to less paperwork and smaller administrative burdens. Here are the two changes to understand.

Claim Type Combines with ADR Limits to Reduce Administrative Burden

Now only 75 percent of a campus's ADR limit from any single claim type can be requested by the RAC. This is down from 100 percent previously and represents good news for hospitals with a high number of inpatient RAC requests.

The administrative burden of processing ADRs for acute hospital inpatient cases is huge. Now, just 75 percent of the ADRs per 45-day period can be for IPPS records. The remaining 25 percent can be requested from all other types (OPPS, SNF, IRF, IPF, ASC, or physician claims). This change is good news for larger organizations, where the 2 percent Medicare claims volume limit calculation often pushes the number of ADRs received over the limit of 400 or 600 every 45 days.

In other words, while Medicare's original calculations for ADR limits still apply, the layering of the new 75 percent limitation by claim type will reduce the number of inpatient ADRs campuses must process every 45 days.

New Minimum Number of ADRs Helps Smaller Hospitals

Smaller hospitals also benefit from the changes on April 15. In the past, RACs were able to request a minimum of 35 records every 45 days. Smaller facilities often reached their 2 percent Medicare claims volume limit before reaching the 35-record minimum, allowing the RAC to request more records than initially intended.

Now, the minimum number of ADRs that RACs may request is 20 records per 45 days. We expect this change to reduce the number of requests received by smaller hospitals, regardless of claim type.

What Remains the Same

Three pieces of the ADR limit calculation remain the same.

400 or 600 ADR maximum every 45 days

There is still a maximum number of ADRs per 45 days of 400 for providers with less than $100M in MS-DRG payments and 600 for providers with over $100M in MS-DRG payments. Both the 400 and 600 request limits are per every 45 days and across all claim types, including professional services.

2 percent of Medicare claims volume

The AHA-supported Medicare Audit Improvement Act (HR 1250) introduced March 19 also limits RAC medical record requests by campus to 2 percent of the Medicare claims submitted for a particular care setting in the previous calendar year. When combined with the 400 or 600 maximum and 2 percent claims volume calculation, the 75 percent limitation in ADRs from any single claim type is expected to minimize the number of inpatient records requested—relieving the RAC administrative burden for healthcare providers.

Campus concept

Finally, the campus concept is still in use. Multiple locations with the same Tax Identification Number (TIN) and located nearby are now counted as one campus unit, and they share the maximum record request burden. Area is determined by the first three positions of the ZIP code. If the TIN and first three numbers of the ZIP code are the same, multiple locations are counted as one campus.

Demand Letter is Still Key to Managing ADRs

Regardless of the number of ADRs received, ensuring that initial RAC demand letters reach the right contact at each campus is still a serious provider issue nationwide—and a general complaint of the RAC program.

Centralizing audit management to cross all campuses and encompass all claim types is an important step in overcoming this issue. Once the audit management process is herded into one corral, a single point of contact can be established with the RAC or RACs.

It is only by ensuring that the right contact receives all initial demand letters that providers truly improve the audit process, reduce administrative burdens, and take full advantage of new ADR limits.

About the Author

Dawn Crump is Vice President of Audit Management Solutions at HealthPort. She formerly served as Network Director of Audit and Compliance at a large regional healthcare system in Missouri.

Contact the Author

Dawn.crump@healthport.com

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Dawn Crump

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