In order to determine whether the use of Recovery Audit Contractors (RACs) was a cost-effective means of ensuring that correct payments were being made to providers and suppliers in the Medicare Fee-For-Service Program, the Centers for Medicare & Medicaid Services (CMS) developed the (RAC) demonstration program, which lasted from March 2005 to March 2008. The RAC program not only provides CMS a new tool for identifying past improper payments, but also will be used to prevent future overpayments. To ensure accuracy, RACs are required to use nurses, therapists, certified coders, and physician Carrier Medical Directors (CMD).
The RAC Demonstration evolved from an initial study conducted by CMS involving the Comprehensive Error Rate Testing (CERT) program and the Hospital Payment Monitoring Program (HPMP). The success of both the RAC Demonstration and the CERT study allowed for the legislation of Section 302 of the Tax Relief and Health Care Act of 2006 to make the RAC Program permanent. Knowing that the estimated amount Medicare overpaid in 2007 was 10.8 billion dollars, it was in CMS' best interest to further pursue these financial discrepancies due to both an increasing beneficiary population and skyrocketing health care costs. Preliminary results of the demonstration projects in California, Florida, and New York indicate that the use of recovery auditors is a viable and useful tool for ensuring accurate payments. According to the Office of Management and Budget, Improving the Accuracy and Integrity of Federal Payments (January 31, 2008), Medicare is one of the top three federal programs with the highest amount of improper payments, along with Medicaid and Earned Income Tax Credit.
CMS found that the demonstration was a successful tool in returning money ($693.6 million) to the Medicare Trust Funds and that most of the overpayments (85 percent) were from inpatient hospital providers. Some of the common payment errors CMS found were:
The AAN Professional Association has been advocating for fair and reasonable treatment between RACs and physicians as the program expands nationwide. The Academy promotes educating physicians about the complexities of evaluation and management (E/M) coding before making the RAC audits a permanent fixture. In a comment letter to CMS about this issue, the Academy stressed the inconsistent determinations of proper E/M coding by RACs, and that initial findings of "errors" in E/M coding should be educational rather than punitive.
The Academy also advocates for better systems for obtaining hospital notes and informing physicians that RAC requests must be answered before penalization begins. The Academy believes that RACs should be required to go to the hospitals directly for hospital notes since it is often difficult for physician offices to obtain them.
Finally, the Academy comments urged CMS to establish a neutral arbiter of disagreements for the RAC program. Inherent in the way the RAC process is set up, each RAC has a financial conflict of interest because it serves as the investigator, judge, and collector. An outside entity, without any conflict of interest, should decide any disputed matter when there is disagreement between the RAC and the physician.
In addition, the Academy will continue to collect member comments and concerns regarding the RAC program, and will passing them along to the American Medical Association (AMA). If you have any RAC concerns, please email Katie Kuechenmeister at email@example.com.
Medicare providers in the first round of the permanent program will begin receiving correspondence from their assigned RAC in August 2009. CMS Provider Outreach Programs, including educational meetings and town hall gatherings, will begin in July 2009. The Academy recommends the following steps to assist you in preparing for a possible audit:
Read the CMS fact sheet, "Appealing a Medicare Recovery Audit Contractor (RAC) Overpayment: Understanding The Appeals Process."
The permanent RAC Program is required by Section 302 of the Tax Relief and Health Care Act of 2006 to expand to all 50 states by no later than 2010. Providers will not begin receiving correspondence from a RAC until the RAC and CMS have completed the provider outreach.
Diversified Collection Services (DCS) (1-866-201-0580)
RAC Medical Director Contact: Richard Pozen, MD
CMS Contact Person: Ebony Brandon (410-786-1585)
Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont
CGI Technologies and Solutions, Inc. (CGI) (1-877-316-7222)
RAC Medical Director: Percival Seaward, MD
CMS Contact Person: Scott Wakefield (410-786-4301)
Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio, and Wisconsin
Connolly Consulting Associates, Inc (1-866-360-2507)
RAC Medical Director: Ellen Evans, MD
CMS Contact Person: Amy Reese (410-786-8627)
Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia
HealthDataInsights, Inc. (HDI)
Part A: 1-866-590-5598
Part B: 866-376-2319
CMS Contact Person: Kathleen Wallace (410-786-1534)
Alaska, Arizona, California, Hawaii, Idaho, Iowa, Kansas, Missouri, Montana, Nebraska, Nevada, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming