December 17, 2008

The President-elect and RACs: 100 Days and Counting

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With only weeks before the inauguration of President-elect Barack Obama, political pundits are revisiting a long-held tradition: vigorously speculating on what will be the outcome of the President’s first 100 days in office.

Ironically, Election Day, November 4, was when CMS placed an automatic stay on RAC initiatives arising from a dispute filed by two unsuccessful bidders for RAC program. Under provisions of the Competition and Contracting Act of 1984 (CICA), the Government Accountability Office — the agency that is reviewing the protest — has 100 days to reach a decision.


Yet, some industry experts believe that RACs will be back in business within the next 60 to 90 days. That would make the rollout of provider education to what CMS defines as “first wave” states around early to mid-February.

But who’s counting? Well, probably any and all healthcare leaders who are taking the RAC initiative seriously. One hundred days could be time well spent in preparing for them. As we say in California, it’s not IF the Big One will shake up the state but WHEN. The question remains: what should healthcare providers be doing in the interim 100 days?

Before the stay had been put in place, CMS was advising providers to conduct an internal assessment to ensure that submitted claims would meet the Medicare rules. Other steps that CMS advised at the time included the following:

  • Identifying where improper payments had been persistent by reviewing the RACs’ Websites and identifying any patterns of denied claims within their own practice or facility.

  • Implementing procedures to promptly respond to RAC requests for medical records.

  • If the provider disagrees with the RAC determination, filing an appeal before the 120-day deadline.

  • Keeping track of denied claims and correcting these previous errors.

  • Determining what corrective actions need to be taken to ensure compliance with Medicare’s requirements and to avoid submitting incorrect claims in the future.



RACs and Oversight


The four permanent RAC contractors include the following:

Diversified Collection Services, Livermore, Calif., which would initially cover Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont;

CGI Technologies and Solutions, Fairfax, Va., for Indiana, Michigan and Minnesota;

Connolly Consulting Associates, Wilton, Conn., for Colorado, Florida, New Mexico and South Carolina; and

HealthDataInsights, Las Vegas, Nevada, for Arizona, Montana, North Dakota, South Dakota, Utah and Wyoming.

Additional states would be added to each RAC region in 2009, according to the CMS.

CMS contracted with Provider Resources, Inc, of Erie, Pa., to work as the Recovery Audit Contractor (RAC) Validation Contractor. The RAC Validation Contractor (RVC) will work with CMS and the permanent? RACs to approve new issues the RACs want to pursue for improper payments, as well as perform accuracy reviews on a sample of randomly selected claims on which the RACs have already collected overpayments.
According to CMS, the RVC would be another tool CMS will use to provide additional oversight and assurance that the RACs are making accurate claim determinations in the permanent program.
CMS said it was also shifting its traditional approach to fighting fraud by working directly with beneficiaries by ensuring they received the durable medical equipment or home health services for which Medicare was billed and that the items or services were medically necessary.
Lessons learned from the RAC demonstration

The 3-year RAC demonstration program in California, Florida, New York, Massachusetts, South Carolina and Arizona collected over $900 million in overpayments and nearly $38 million in underpayments returned to health care providers.

In September, when Timothy Hill, CFO and Director Office of Financial Management, Centers for Medicare & Medicaid, spoke before a group of healthcare executives in Washington, he said that RACs collected $980 million from March 2005 through March 2008. Of that amount, 84 percent was collected by inpatient providers, and 14 percent by outpatient hospitals. He said the total cost to run the RAC demonstration was $205.1 million as of July 2008.

Along the way, a number of lessons were learned in how RACs interacted with providers. In response to hospitals’ complaints during the RAC demonstration about being inundated by requests for records, CMS plans to establish a limit on the number of records that can be requested during each 45-day period.

In the new national program, Medicare claims from physicians as well as hospitals will be subject to audits, according to CMS. RACs are expected to choose and review any claim that is likely to contain an improper payment says CMS.

After all, it is all about the money.

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Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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