January 28, 2015

Return of the RACs

By Lindy Benton

The song “Return of the Mack” by Mark Morrison has played randomly in my head since earlier this year, when the Centers for Medicare & Medicaid Services (CMS) announced the limited return of Recovery Auditor program. I just make one slight change to the song’s chorus: “return of the RACs.”

The program has been dormant since June 1, 2014, when current audit contracts expired. Though the program will eventually make its way back to full throttle, it’s entering a limited second run. CMS has extended contracts for the existing four RAC auditors through Dec. 31, 2015. Time will tell how effective that approach becomes. 

CMS also recently announced that it modified contracts with current auditors to allow for a limited number of Medicare fee-for-service claim reviews beginning in August. Auditors have been conducting a limited number of automated reviews and a small number of complex reviews on certain claims. Also, at the start of 2015 CMS indicated that it will restrict the RAC program's window for patient status reviews to six months if the provider submits its claim within three months of the date of service. This and other changes reportedly will be effective with each new contract awarded under the program, beginning with the RAC Region 5 contract that CMS awarded on Dec. 30, 2014 to Connolly LLC for the purpose of identifying improper Medicare payments to home health agencies, hospice agencies, and medical device suppliers. Contracts for Regions 1, 2 and 4 reportedly will remain under a "pre-award protest," likely through the summer, while the agency tentatively plans to finalize the Region 3 contract in the near future.

No inpatient hospital patient audits will be conducted during the hiatus, but there’s still a chance that health systems will receive audit requests for other claim types. 

The Medicare RAC program was established by the Tax Relief and Health Care Act, which was enacted in December 2006 to “correct improper payments for Medicare claims.” Since the audit program began in 2009, about $8 billion in “improper” Medicare payments have been identified and returned to the federal government, CMS has noted. It has not been a fun journey for hospitals, as many folks leading charges in defense of the program will attest.

Much of the pain of the program for health systems has stemmed from fighting for money they feel they deserve for services rendered. For these providers, there’s likely little silver lining in the announcements about the program from CMS, but there are ways to mitigate the process and alleviate some of the aforementioned pain.

While RAC audits are unavoidable, for those treating Medicare patients, there are steps that can be taken reduce risk – and, in the event of an audit request, more easily manage the audit response. First, providers should ensure that they are billing and coding claims in compliance with Medicare regulations. Second, they should ensure that they are keeping notes relating to patient diagnosis, treatment, and care in the patients’ medical record (and when audited, a healthcare organization may wish to designate audit coordinators to manage the process, from receiving the request to tracking it and providing supporting documentation to the requester).

Finally, and marking perhaps the most efficient and stress-free solution for managing audits, health systems should establish a relationship with a CMS-certified health information handler that is able to securely exchange electronic information through the CMS gateway so information and patient health records are sent to the requester directly.

This electronic gateway mechanism is known as electronic submission of medical documentation (esMD). It was created by CMS as a way to ensure secure electronic exchange of health information from the health system to a CMS-authorized contractor to support and improve the audit process. By partnering with a health information handler, hospitals can securely exchange audit documents in a timely manner and ensure electronic delivery and confirmation of these documents.

Perhaps this is a rehashing of topics about which we should already know much. As members of the healthcare community, this news is nothing new, but as a developing story there’s likely much news to come in a short period of time (according to CMS’s priorities and timelines, of course). Then again, perhaps not. The program’s hiatus has been the status quo for nearly a year, meaning we’ve been in limbo for a long time.

The RAC program will not be going away; that we can be sure of. When it does return, just know there are solutions to manage it. 

Maybe then I’ll be singing a different 1980s tune: “Don’t Worry, Be Happy.”

About the Author 

Lindy Benton has worked in the healthcare information technology field for more than 20 years and is currently the CEO of EA Holdings, which includes MEA and NEA. Before joining MEA/NEA, Lindy served as divisional executive at The Sage Group, managing a $350 million division with 1,400 employees. Prior to working at Sage, Lindy worked at Cerner Corporation for 15 years. She held various leadership positions, wherein she achieved double-digit revenue growth while building high-performing teams that were consistently recognized year after year with outstanding achievement awards.

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