Avoid Being Put on the RAC: Be Prepared for a Recovery Audit Contractor Review
Any medical practice submitting claims to a government program, such as Medicare, may contend with a Recovery Audit Contractor (RAC). RAC audits are not one-time or intermittent reviews—they are a systematic and concurrent operating process for ensuring compliance with Medicare’s clinical payment criteria, documentation, and billing requirements. The Medicare RAC program was signed into law as part of the Medicare Prescription Drug Improvement and Modernization Act of 2003 and made permanent by the Tax Relief and Health Care Act of 2006. Its purpose is to identify improper Medicare payments—both overpayments and underpayments—nationwide. In three years of RAC audits, auditors have identified nearly $1 billion dollars in overpayments. The RACs use proprietary software programs to identify potential payment errors in areas such as duplicate payments, fiscal intermediaries’ mistakes, medical necessity, and coding. RACs also conduct medical record reviews. Implementing appropriate compliance plans now will reduce anxiety and uncertainty if you are subjected to an audit. Assign a staff member the job of implementing a compliance plan, or consider hiring a contractor for this task. The person responsible for implementing the plan should regularly: Review denied claims categories during the RAC demonstration program. Keep abreast of notifications on the CMS website. Review the annual Office of Inspector General (OIG) Work Plan document to assist providers in determining potential areas of RAC audits. Monitor RAC progress at your regional RAC. Each of the four regional RACs maintains a website posting information on new audit focus areas and the status of a provider’s audits. Perform an audit of your own billing practices—a snapshot audit may illustrate areas that need work. If you are audited: Before you send records to the auditor, be sure to review them in a “self-review.” Are there common themes? Are you coding with the correct documentation? Make copies of everything you send to the RAC auditor, and keep all of your documentation. Here is information the person implementing the compliance plan should know: Staying on top of the RAC audits is important, as there are multiple policies and procedures governing RAC audits. The RAC can request a maximum of 10 medical records from a provider in a 45-day period. The time period that may be reviewed has changed from four years to three years. Responses are time-sensitive, and significant penalties may result if not handled properly. RAC contractors are paid on a contingency basis, which means they are only paid when they find either overpayments made by CMS or potential fraud by a provider. The Academy offers resources to help members understand the RAC program, including an annual educational session at the annual meeting on Carrier Advisor Committees (CACs). The Academy also provides updated information to members on the RAC program on our website at http://www.entnet.org/Practice/Recovery-Audit-Contractors.cfm. If you have questions regarding the RAC program, email the Health Policy team at healthpolicy@entnet.org. The Doctors Company provides its members with MediGuard® core coverage, which protects against regulatory risks including Medicaid and Medicare RAC allegations. MediGuard® PLUS is an enhanced coverage available to members and includes higher limits and expanded features. For more information, visit www.thedoctors.com/mediguardplus.
The Medicare RAC program was signed into law as part of the Medicare Prescription Drug Improvement and Modernization Act of 2003 and made permanent by the Tax Relief and Health Care Act of 2006. Its purpose is to identify improper Medicare payments—both overpayments and underpayments—nationwide. In three years of RAC audits, auditors have identified nearly $1 billion dollars in overpayments.
The RACs use proprietary software programs to identify potential payment errors in areas such as duplicate payments, fiscal intermediaries’ mistakes, medical necessity, and coding. RACs also conduct medical record reviews. Implementing appropriate compliance plans now will reduce anxiety and uncertainty if you are subjected to an audit.
Assign a staff member the job of implementing a compliance plan, or consider hiring a contractor for this task. The person responsible for implementing the plan should regularly:
Review denied claims categories during the RAC demonstration program.
Keep abreast of notifications on the CMS website.
Review the annual Office of Inspector General (OIG) Work Plan document to assist providers in determining potential areas of RAC audits.
Monitor RAC progress at your regional RAC. Each of the four regional RACs maintains a website posting information on new audit focus areas and the status of a provider’s audits.
Perform an audit of your own billing practices—a snapshot audit may illustrate areas that need work.
If you are audited:
- Before you send records to the auditor, be sure to review them in a “self-review.” Are there common themes? Are you coding with the correct documentation?
- Make copies of everything you send to the RAC auditor, and keep all of your documentation.
Here is information the person implementing the compliance plan should know:
- Staying on top of the RAC audits is important, as there are multiple policies and procedures governing RAC audits. The RAC can request a maximum of 10 medical records from a provider in a 45-day period. The time period that may be reviewed has changed from four years to three years.
- Responses are time-sensitive, and significant penalties may result if not handled properly. RAC contractors are paid on a contingency basis, which means they are only paid when they find either overpayments made by CMS or potential fraud by a provider.
The Academy offers resources to help members understand the RAC program, including an annual educational session at the annual meeting on Carrier Advisor Committees (CACs). The Academy also provides updated information to members on the RAC program on our website at http://www.entnet.org/Practice/Recovery-Audit-Contractors.cfm. If you have questions regarding the RAC program, email the Health Policy team at healthpolicy@entnet.org.
The Doctors Company provides its members with MediGuard® core coverage, which protects against regulatory risks including Medicaid and Medicare RAC allegations. MediGuard® PLUS is an enhanced coverage available to members and includes higher limits and expanded features. For more information, visit www.thedoctors.com/mediguardplus.