Original story posted on: May 20, 2009

RAC Strategy: When to Talk and When to Walk

By
Updated on: June 22, 2012

cengle120xBy Carla Engle, MBA


We're all in a hurry-up-and-wait mode.

The past month has seen a flurry of activity: HCCA's annual conference in Las Vegas, several open-door CMS forums regarding RACs, and outreach sessions held around the country by RACs.


Yet we all still are anticipating those first communications (most likely in the form of automated reviews) directly from the RACs that we suspect will happen before the end of May.

 

Despite the trickle of information that finally is coming through now, it still seems that we have more questions than answers at this point about specifics hospitals need to address in the not-so-distant future. I continue to see very legitimate questions being raised constantly about appropriate practices and issues that have not been clarified yet for hospitals' day-to-day operations, representing decisions that are going to have to be made quickly once RAC activity commences:

 

§  Discussion vs. appeal strategies

§  Recoupments vs. refunds

§  Paying interest

§  Voluntary repayments and self-disclosure (and extrapolation, on either side of the equation)

§  Planning and booking reserves for RAC-related claims

§  RAC Web sites and electronic communication

 

In this installment, we will examine the risks and rewards of holding a discussion period after a review. When the RAC completes a medical record review (in the case of a complex review) or issues a demand letter (in the case of an automated review), you then have two options: one, to initiate a discussion with the RAC, or two, to file an appeal with the FI or MAC. Each approach should be considered, with a final decision depending on the facts and merits of each case and being made in conjunction with your overall facility strategy and policy and legal advice from counsel.

 

What is the discussion period?

 

CMS called it the "rebuttal period" in the demonstration, but in the permanent program, it is being called the "discussion period." During this informal and voluntary phase that is not a prerequisite to the appeal process, you can identify your grounds for a dispute ("I think you're wrong, and I have more information to support that") and dispute alleged overpayments. In an open-door forum call, CMS stated that you literally may pick up the phone with your RAC auditor and initiate the discussion period, but suggested you also send a follow-up letter with supporting documentation.

 

What are the time frames for the discussion?

You must initiate a discussion within 15 days of the receipt of a demand letter (in an automated review) or a review results letter (in a complex review), but the sooner you start the process the better. The RAC then has 60 days to respond. Bear in mind, however, that this does not stop the clock on the 120-day time period during which you can request a redetermination (the first-level appeal) from your Medicare contractor on the interest accrued when money is not refunded within 30 days of request. Providers that initiate a discussion with the RAC may want to either simultaneously file a request for redetermination to the Medicare contractor or carefully track the status of the discussion and be prepared to file a request within 120 days.

 

If the RAC agrees with your position, you stop the adjustment. If you are denied in the discussion period, you then still have the right to pursue the appeal process. The discussion period does not take away your right to appeal, nor does it affect your recoupment or appeal time frames.

 

Discussion/Appeal Strategy

 

CMS suggests that providers consider both the discussion period as well as the appeal process when it comes to challenging claims. If you think you're going to launch an appeal, it is recommended that you file one immediately, because you possibly can risk having your funds recouped otherwise. But if you're sure that the RAC is wrong and you have documentation to support your case, CMS recommends you use the discussion period.

 

The RAC considers rebuttal statements and other relevant evidence in determining whether a decision is justified. Some demonstration project examples indicate that a discussion period may be a waste of a provider's time and resources; still, perhaps the most compelling reason to submit an initial rebuttal is to gain additional time for considering whether to move on to the first step in the formal appeals process.

 

For denials based on diagnosis-related group (DRG) ICD-9-CM codes, providers have the option of either accepting the new DRG assigned by the RAC or initiating a discussion. Discussions challenging the new DRG simply require the hospital to submit additional documentation supporting the original DRG.

 

Initiating a rebuttal period is obviously a shorter and more efficient process than a long, drawn-out appeal process, but in some circumstances, especially in connection with denials based on medical necessity, an appeal may be more desirable. Providers reported very limited success with rebuttals for inpatient medical necessity denials, especially with one-day stays, during the demonstration project. Discussions, however, would be prudent for medical necessity denials if new documentation is available to support the claim.  Ultimately, the discussion process may assist in your decision on whether to continue to appeal.


 

 

The Costs vs. the Benefits of the Appeal Process

 

Consideration, too, needs to be made in deliberation of the potential benefits and costs of filing an appeal before a decision is made on whether to pursue one. The benefits are obvious: you get to keep the money you already were paid. More subtle issues, however, also should be weighed in the decision. If you are successful in your appeal, it may limit similar denials in the future: in doing so, you become a less attractive target to RACs or other auditing bodies. In the process, you also protect your public image, averting a public relations concern, and minimize any other compliance consequences that could have materialized if the denials were not disputed.

 

But before waging an appeal, the costs to your facility also have to be calculated in order to assure that you are getting a return on your investment, an investment of both internal and external resources that could affect the normal operation of your facility. It was estimated during the demonstration project that the average cost of an appeal was over $2,000. There also are hidden costs in filing an appeal before a recoupment takes place; if you lose, you will owe interest during the interim period.

 

All of these issues are vital in the myriad of choices that a facility will face in the decision tree for individual claims as well as overall strategies in approaching the RAC process. If you are willing to share your experience (anonymously, of course), as well as some policies or tools you are preparing or already have implemented during the demonstration project, please e-mail me and share! Stay tuned, too, for more pragmatic views on these issues to help your facility be prepared for upcoming audits.

 

About the author


Carla Engle, MBA - Product Manager

Carla's background includes over twenty years in hospital and physician practice operations, particularly in reimbursement and billing functions.  Prior to joining Wolters Kluwer recently, she was the Vice President of Compliance for a national revenue cycle solutions company and prior to that 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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