FAQs about RACs
What is a RAC
Audit?
What makes RAC audits different than any other
Medicare audit?
How will the RAC determine which claims to
review?
Will the RAC review evaluation and management
(E&M) services on physician claims be allowed under Part
B?
Whose claims will be reviewed under the RAC
program?
How long does a provider have to submit medical
records when requested by a RAC?
Will providers be paid interest if the appeal is
overturn?
Will CMS use calendar days or business days when
determining the number of days a provider has to submit medical
records?
What is the reimbursement procedure and rate for
photocopy charges associated with records for RAC?
Do RACs look for underpayments? What happens if
they find an underpaid claim?
How are the RACs paid for finding
underpayments?
Will Critical Access Hospitals (CAH) be subject
to RAC review? If so, how will the funds be recouped?
What are the target areas for the RACs?
Do most providers win RAC appeals?
What basis do the RACs use to deny cases based on
medical necessity?
Why is there a
RAC focus on ICD-9 procedure code 86.22 - Excisional
Debridement?
What is a RAC Audit?
The Centers for
Medicare and Medicaid Services executed the Recovery Audit
Contractor demonstration in 2005 under Section 306 of the Medicare
Modernization Act of 2003 in order to establish whether RACs are an
efficient method of identifying and correcting improper payments to
providers. Three states were chosen for the demonstration program
based on their Medicare
consumption:
California, Florida, and New York. Two types of RACs were hired in
each state:
As a result of the demonstration project, the Medicare Trust
Fund gained a substantial amount of funds. With this perceived
success, the program will be extended to all states and implemented
by 2010. As of October 6, 2008, CMS announced the four permanent
RACs and reaffirmed the immediate, rapid and comprehensive rollout
of the Medicare Recovery Audit program nationwide. The permanent
RACs have been initially assigned to 19 states and four different
regions as the rollout begins nationwide.
What makes RAC audits
different than any other Medicare audit?
The objective of the RAC audit is not
the same as a traditional Medicare audit. Unlike traditional
audits, RAC audits are being performed by independent contractors
who are paid for identified overpayments and underpayments.
CMS hopes that the financial incentive given to the RAC auditors
will motivate them to find incorrect payments and either refund or
recoup the incorrect payment amount.
How will the RAC determine which claims to
review?
The RACs will use
their own proprietary software and systems as well as their
knowledge of Medicare rules and regulations to determine what areas
to review.
Will the RAC review evaluation and
management (E&M) services on physician claims be allowed under
Part B?
Yes, the review of all evaluation and
management (E & M) services will be allowed under the RAC
program. The review of duplicate claims or E & M services that
should be included in a global surgery were available for review
during the RAC demonstration and will continue to be available for
review. The review of the level of the visit of some E & M
services was not included in the RAC demonstration. CMS will work
closely with the American Medical Association and the physician
community prior to any reviews being completed regarding the level
of the visit and will provide notice to the physician community
before the RACs are allowed to begin reviews of evaluation and
management (E & M) services and the level of the visit.
Whose claims will be reviewed under the RAC
program?
Physicians, providers and suppliers who
submit claims to Medicare.
How long does a provider have to submit
medical records when requested by a RAC?
Providers must respond within 45 days
to a RAC request for medical records. Providers may request an
extension at any time prior to the 45th day by contacting the
RAC.
Will providers be paid interest if the appeal
is overturn?
At certain times, CMS is required to
pay interest when an appeal decision is favorable to the provider.
The payment of interest in response to a favorable provider appeal
decision is determined by CMS' interpretations of the appeal
regulations. These regulations determine the process for all
overpayments, not just RAC identified overpayments
Will CMS use calendar days or business days when
determining the number of days a provider has to submit medical
records?
CMS will utilize Calendar Days when
making these determinations.
What is the reimbursement
procedure and rate for photocopy charges associated with records
for RAC audits?
RACs are required to reimburse PPS
providers and Long Term Care providers. The reimbursement rate is
12 cents per page for reproduction of medical records. Facilities
are not required to submit vouchers to the RAC requesting payment.
Rather, the RACs will automatically issue payments to the hospitals
for photocopying charges. RACs are required to pay for copying on a
monthly basis. All checks should be issued within 45 days of
receiving the medical record.
Do RACs look for underpayments? What happens if
they find an underpaid claim?
Yes, Recovery Audit Contractors (RAC)s
will identify underpayments as well as overpayments. In situations
where a RAC identifies both overpayments and underpayments for a
provider, the RACs offset the underpayment from the overpayment. In
situations where a RAC identifies an underpayment for which there
is no overpayment from which to offset, the RACs will inform the
carrier or intermediary who will proceed with the claim adjustment
and payment to the provider. A MLN Matters article, SE0617, was
released on 04/10/2006 with additional information for providers
concerning the identification of an underpayment by a RAC.
How are the RACs paid for finding
underpayments?
RACs are paid
on a percentage basis for all underpayments identified and
recovered.
Will Critical Access Hospitals
(CAH) be subject to RAC review? If so, how will the funds be
recouped?
Yes, Critical Access Hospitals are
subject to RAC review. Any adjustments will be reflected on the
final PS&R. If the cost report has already had a final
settlement, the amount will be demanded and then offset against
future claims if not paid in full by the provider.
What are the
target areas for the RACs?
RAC audits are centered around a wide range of perceived
provider errors initially uncovered by both Medicare fiscal
intermediaries and the Office of Inspector General - as well as
through contracted medical review relationships such as
Comprehensive Error Rate Testing (CERT) organizations and the QIO
Hospital Payment Monitoring Program (HPMP). The project
results for each year identify those areas of focus. Many
hospitals were audited for Inpatient Rehabilitation Facility
admissions, chest pain related to one day stays, respiratory with
ventilator coding, excisional debridement documentation,
colonoscopies, etc.
Do most
providers win RAC appeals?
First, we at HORNE recommend that you always appeal if
you have reason to believe your claim is legitimate and
valid. Based upon the latest publicly available data,
providers are winning approx. 35% of RAC appeals. It is
crucial to note that providers have challenged approx. than 22.5%
of all RAC audit overpayment determinations (approx. 118,000
appeals out of 525,000 RAC claim denials). Out of the 118,000
RAC appeals to date, providers have prevailed in approx. 40,000
cases. As a result, CMS is prevailing in 93% of
total claim denial cases.
What basis do the RACs use to deny cases based
on medical necessity?
The RACs have not
established new arguments or support to uphold medical necessity
denials. Most of the denials are based on the same protocol
other audit agencies follow when reviewing cases for medical
necessity.
Why is there a RAC focus on ICD-9
procedure code 86.22 - Excisional Debridement?
Unlike a lot of coding guidance, the documentation
requirements for use of excisional debridement codes are black and
white which provide RACs with firm support if the documentation
deviates from the standard requirements. In addition, the use
of 86.22 versus an alternative procedure makes a different in the
payment level.