Recovery Audit Contractor (RAC) FAQ

FAQ 1: What is the RAC program?

As part of the efforts to fight fraud, waste and abuse in the Medicare program, the Tax Relief and Health Care Act of 2006, required a national Recovery Audit Contractor (RAC) program to be in place by January 1, 2010. The goal of the recovery audit program is to identify improper payments made on claims for services provided to Medicare beneficiaries. Improper payments may be overpayments or underpayments.

Overpayments can occur when health care providers submit claims that do not meet CMS coding or medical necessity policies. Underpayments can occur when health care providers submit claims for a simple procedure but the medical record reveals that a more complicated procedure was actually performed. Providers that could be reviewed include hospitals, physician practices, nursing homes, home health agencies, durable medical equipment suppliers and any other provider or supplier that submits claims to Medicare.

FAQ 2: Are there any significant changes in the program for 2017:

Yes. CMS is currently working on new contracts in response to many concerns raised about its RAC program. These modifications in the program have been made to reduce provider burden, according to CMS. Improvements are expected to include the following:

 

The RACS in Regions 1-4 will perform postpayment review to identify and correct Medicare claims that contain improper payments (overpayments or underpayments) that were made under Part A and Part B for al provider types other than Durable Medical Equipment, Prosthetics, Orthotics and Supplies and Home Health/Hospice. The Region 5 RAC will be dedicated to the postpayment review of DMEPOS and home Health/Hospice claims nationally. In May of 2016, CMS revised the method used to calculate additional documentation requests (ADR) limits for institutional providers (Facilities).  

FAQ 3: Will the Recovery Audit Contractors (RAC)s replace all current review entities?

No. Other entities such as Medicare Administrative Contractors, Medicaid, Program Safeguard Contractors, Office of Inspector General or Quality Improvement Organizations (QIOs) could still review a provider's claims. The RACs will not review a claim that has previously been reviewed by another entity.

FAQ 4: Who are the RAC contractors?

The country has been divided into 4 regions. Each region has been awarded to a contractor. The new RACs were selected under an open bidding process. The RACs will be paid on a contingency fee basis on the overpayments and underpayments they identify.

 

Name

Website

E‐mail

Phone Number

Region 1: Performant Recovery, Inc.

States: CT, MI, IN, ME, MA, NH, NY, OH, KY, RI and VT

https://www.performantrac.com/PROVIDERPORTAL.aspx

info@Performantrac.com

1‐866‐201‐0580

Region 2: Cotiviti, LLC

States: IL, MN, WI, NE, IA, KS, MO, CO, NM, TX, OK, AR, LA, and MS

https://www.Cotiviti.com/RAC

RACInfo@Cotiviti.com

1‐866-360-2507

Region 3: Cotiviti, Inc.

States: AL, FL, GA, NC, SC, TN, VA, WV, Puerto Rico and U.S. Virgin Islands

https://www.Cotiviti.com/RAC

RACInfo@Cotiviti.com

1‐866‐360‐2507

Region 4: HMS Federal Solutions

States: AK, AZ, CA, DC, DE, HI, ID, MD, MT, ND, NJ, NV, PA, OR, SD, UT, WA, WY, Guam, American Samoa and Northern Marianas

https://racinfo.healthdatainsights.com

racinfo@emailhdi.com

Part A: 1-866‐590‐5598

Part B: 1-866‐376‐2319

 

Region 5: Performant Recovery, Inc.

Nationwide for DMEPOS/HHA/Hospice

 

https://www.performantrac.com/PROVIDERPORTAL.aspx

 

info@Performantrac.com

 

1‐866‐201‐0580

 

Medicare Fee For Service RAC Contact Information

 

Updated 12-06-2016

 

 

Providers should first attempt to contact the Recovery Audit Contractors (RAC) through the customer service line. If that does not answer the provider's questions and/or concerns, then the provider can contact CMS. CMS has set up a special email address for the provider community to use: RAC@cms.hhs.gov  Please do not send Personal Health Information to this e-mail address.

FAQ 5: What are the RAC auditors looking for?

The RAC contractors are tasked with identifying improper payments made on claims of health care services provided to Medicare beneficiaries. Each RAC uses their own proprietary software and the RAC's interpretation of Medicare rules and regulations. These payments may be underpayments or overpayments. This will be done by focusing auditing efforts on companies and individuals whose billings for Medicare services trend higher than the majority of providers and suppliers in their community. In these cases, the RAC proprietary software has determined there is a possibility that the claim may contain an error.

Under most circumstances, the RAC will request medical records from the provider to determine whether overpayment(s) and/or underpayment(s) have occurred. When medical records are submitted, the process is called a Complex Review. In these cases, the RAC proprietary software has determined there is a high probability (but not certainty) that the claim contains an overpayment.

In some situations, the RAC may use automated reviews to demand monetary recoupment (where NO medical record is involved in the review) in situations where the RAC proprietary process determines with certainty that the claim contains an overpayment. An automated review must: 

     

  1. Have a clear policy that serves as the basis for the overpayment ("clear policy" means a statute, regulation, National Coverage Determination, coverage provision in an interpretive manual, or Local Coverage Determination that specifies the circumstances under which a service will always be considered an overpayment);
  2.  

     

  3. Be based on a medically unbelievable service; or occur when no timely response is received in response to a medical record request letter. 
  4.  

The RAC will also work directly with beneficiaries to ensure they received the durable medical equipment or home health services for which Medicare was billed and that the items and services were medically necessary. The RAC's will review paid claims for all Medicare Part A and B providers to ensure their claims met Medicare statutory, regulatory and policy requirements and regulations.

Payments will be deemed improper when:

     

  • Payments are made for services that were medically unnecessary or did not meet the Medicare medical necessity criteria.
  •  

     

  • Payments are made for services that are incorrectly coded (e.g., the provider submits a claim for a certain procedure, but the medical record indicates that a different procedure was actually performed).
  •  

     

  • Providers fail to submit documentation to support the services provided when requested or fail to submit enough documentation to support the claim.
  •  

     

  • The provider is paid twice because duplicate claims were submitted.
  •  

     

  • Other errors are made (e.g., carrier pays the claim according to an outdated fee schedule). 
  •  

     

  • Medicare pays a claim that should have been paid by a different health insurance company (e.g. beneficiary is employed and gets health benefits through his or her job, that health insurance company-not Medicare-that may be the primary payer of the beneficiary's health care services).
  •  

 

FAQ 6: What types of penalties or fines might the RAC Contractor be empowered to levy?

In both the demonstration program and in the permanent program the RAC Contractor has the ability to perform extrapolation based on improper payments identified during a review. However, during the demonstration program, none of the demonstration RACs chose to follow the extrapolation process.

When RACs choose to do extrapolation, they will have to follow all of the same instructions that the CMS carriers, FIs and MACs have to follow about selecting a statistically valid random sample using a statistician and any other requirements for using extrapolation.

Interest will accrue from the date of the final determination and be charged on an overpayment amount for each 30-day period that payment is delayed. Any payments received from a provider will be first applied to any accrued interest and then to any remaining principal balance.

FAQ 7: What should I do if I receive correspondence from a RAC auditor requesting records?

If a request is received for records from a RAC contractor, the records requested must be sent in a timely manner. The response must be received within 45 calendar days or request an extension within those 45 days. The RAC may make a finding than an overpayment or underpayment exits if there is no timely response to a request for medical records.  When you receive a records request from a RAC, you should have the claim in question reviewed internally and start preparing to file an appeal in the event that the RAC determines that the claim was overpaid.

FAQ 8: What is the RAC process timeline?

     

  1.  RAC request for medical records: 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. Notify the RAC of the precise address and contact person they should use when sending Medical Record Request Letters. Confirm RAC receipt of the medical records. The RAC may request a site visit to review medical records. The Provider may deny a RAC on-site access to its facility and records. The RAC cannot make an overpayment determination based on lack of access. The RAC would need to obtain copies of the records by submitting a request in writing.  Beginning April 1, 2012, CMS began instituting a reimbursement cap of $25 per medical record. Providers submitting medical records to a Recovery Auditor after April 1, 2012 will receive a maximum of $25 per medical record. This includes both the $0.12 per-page cost for photocopying, as well as first class postage.
  2.  

     

     

  3. Overpayment Demand Letter received: Call the RAC within 15 days from the date you receive the demand letter to discuss the overpayment and send any evidence to counter an offset. Note: Calling your RAC does not constitute a formal appeal. Recoupment will begin on the 41st day from the date of the first demand letter if: 
  4.  

       

    1. payment is not received in full, or
    2.  

       

    3. an acceptable request for an extended repayment schedule, or
    4.  

       

    5. a valid request from a provider for a contractor redetermination is not date stamped in the Medicare contractor's mailroom by day 30 from the date of the demand letter.
    6.  

Note: if an appeal is filed later than 30 days, the contractor will also stop recoupment at whatever point that an appeal is received and validated, but Medicare may not refund any recoupment already taken.

 

     

  1. Appeal: If you believe the request for overpayment is unjustified, you must file an appeal. If you do so within 30 days of receipt of the overpayment demand letter, you will avoid a Medicare recoupment action. Interest begins to accrue 31 days from the receipt of the overpayment letter regardless of whether an appeal is filed. No interest accrues if repayment occurs within 30 days.
  2.  

 

There are five levels of appeal:

1st Level Appeal: You have 120 days to file the first appeal, which is known as a "redetermination." Redeterminations are conducted by Carriers or Medicare Administrative Contractors (MAC). While you have 120 days to file the first appeal, you can only avoid a Medicare recoupment action if you do so within 30 days. The carrier's decision is usually issued within 60 days from receipt of the redetermination request.

2nd Level Appeal: You have 180 days to appeal to the 2nd level. Second level appeals are called "reconsiderations." Reconsiderations are conducted by Qualified Independent Contractors (QICs). The QIC's decision is usually issued within 60 days from receipt of the reconsideration request.

3rd Level Appeal: You have 60 days to appeal to the 3rd level. At the third level of appeal, an Administrative Law Judge (ALJ) will review your case. If the ALJ level process reverses the Medicare overpayment determination, Medicare will refund both principal and interest collected, and pay interest on any recouped funds that Medicare took from ongoing Medicare payments. The ALJ will generally issue his or her decision within 90 days of receipt of the hearing request.

4th Level Appeal: 60 days to appeal to the 4th level. At the fourth level of appeal, an HHS Department Appeals Board (Medicare Appeals Council) will review your case. The MAC will generally issue its decision within 90 days from receipt of your request for review.

5th Level Appeal: Again, 60 days to appeal to the 5th level. At the fifth level of appeal, a Federal District Court will review your case. At least $1,220 must be in controversy following the MAC review, and this amount will be increased annually.

TOP ISSUE PER REGION

*Based on collected amounts through September 30, 2014.

 

Region 1:

When a patient receives observation care totaling fewer than 8 hours on the same calendar date, the physician shall report Initial Observation Care E/M codes, from CPT code range 99218 – 99220. Payment for CPT codes 99217, 99234, 99235, and/or 99236 billed for observation care for fewer than 8 hours on the same date of service will be denied.

Region B:

Cardiovascular Procedures: (Medical Necessity) Medicare pays for inpatient

hospital services that are medically necessary for the setting billed. Medical documentation for patients undergoing cardiovascular procedures needs to be complete and support all services provided in the setting billed.

Region C:

Cardiovascular Procedures: (Medical Necessity) Medicare pays for inpatient

hospital services that are medically necessary for the setting billed. Medical documentation for patients undergoing cardiovascular procedures needs to be complete and support all services provided in the setting billed.

Region D:

Minor Surgery and other treatment billed as Inpatient: (Medical Necessity)

When beneficiaries with known diagnoses enter a hospital for a specific minor surgical procedure or other treatment that is expected to keep them in the hospital for less than 24 hours, they are considered outpatient for coverage purposes regardless of the hour they presented to the hospital, whether a bed was used, and whether they remained in the hospital after midnight.

FAQ 9: What is the success rate for RAC appeals?

Medicare published the recoveries for FY 2015 as follows:

 

 

 

Recovery Auditing in Medicare for Fiscal Year 2015

Overpayments

Collected

Underpayments

Restored

Total

Corrected

RAC

No. of Claims

Amount Collected

No. of Claims

Amount Restored

No. of Claims

Amount Corrected

Performant

243,601

$83,184,629.22

3,463

$7,790,523.29

247,064

$90,975,152.51

CGI

103,113

$40,412,726.44

3,703

$7,403,196.84

106,816

$47,815,923.28

Connolly

89,068

$140,023,016.08

16,642

$44,302,103.80

105,710

$184,325,119.88

HDI

150,998

$96,104,681.60

8,233

$21,456,085.09

159,231

$117,560,766.69

Unknown14

133

$3,958.23

12

$12,742.81

145

$16,701.04

Total

586,913

$359,729,011.57

32,053

$80,964,651.83

618,966

$440,693,663.40

 

FAQ 10: What are identified areas for risk? CMS is requiring that the Recovery Audit Contractor post the list of issues that they are going to be reviewing on their website. All proposed new issues come from the RAC. They will be submitted to CMS and have to be approved by CMS. Once they are approved, the new issues will be posted to the RAC Website.

FAQ 11: Will the RAC be reviewing E/M services?

During the demonstration program, CMS excluded incorrect E/M levels from RAC review. RACs were given the authority to review E/M services to look for other errors (e.g., duplicate payments, global surgery violations, definition of new patient, etc.). That changed under the permanent program and the RACs are able to review any and all services billed by a physician or any other provider who bills the fee for service Medicare. RACs have to follow the rules in place for all Medicare contractors for physician E/M services and those rules currently state that a reviewer will review the claim under the 1995 guidelines and then review the claim under the 1997 guidelines and abide by whichever one is most advantageous to the provider.

FAQ 12: Should our hospital/physician group implement an audit program in preparation for the RAC?

You may want to consider being proactive in reviewing your company's coding, billing and documentation practices to assure Medicare compliance. Consider taking a sampling of your claims and review the documentation to assure that it supports the billed E/M coding, services billed, medical necessity, and services or test ordered.

     

  • Review information available from the RACs, CMS and the OIG to identify the types of claims where improper payments have been persistent. Compare these issues to similar claims within your own practice or facility.
  •  

     

  • Proactively audit areas of concern and take corrective actions to prevent future improper claims.
  •  

     

  • Implement procedures to promptly respond to RAC requests for medical records, review results letters and demand letters.
  •  

     

  • Be prepared to appeal any overpayment determinations.
  •  

FAQ 13: How far back can the RAC contractors go when selecting claims for review?

During the demonstration program, they were allowed to review claims going back four years. For the permanent program, RACs are able to look back three years from the dates the claim was paid. However, there is a maximum look back date of October 1, 2007. In 2015, CMs limited the RAC look-back period to 6 months from the date of service for patient status reviews, in cases where the hospital submits the claim within 3 months of the date of service. That same look-back condition will continue in 2017.

The Recovery Audit Prepayment Review program allows Medicare Recovery Auditors (RACs) to review claims before they are paid to ensure that the provider complied with all Medicare payment rules. The RACs are conducting prepayment reviews on certain types of claims that historically result in high rates of improper payments. These reviews will focus on seven states with high populations of fraud and error-prone providers (FL, CA, MI, TX, NY, LA, IL) and four states with high claims volumes of short inpatient hospital stays (PA, OH, NC, MO) for a total of 11 states. This demonstration will also help lower the error rate by preventing improper payments rather than the traditional "pay and chase" methods of looking for improper payments after they occur. This demonstration began on September 1, 2012.

FAQ 14: Can RACs review records before claims are paid?

The Recovery Audit Prepayment Review programs allow RACs to review claims before they are paid to ensure that the provider complied with all Medicare payment rules. The RACs are conducting prepayment reviews as part of a demonstration project on certain types of claims that historically result in high rates of improper payments. These reviews will focus on seven states with high populations of fraud and error-prone providers (FL, CA, MI, TX, NY, LA, IL) and four states with high claims volumes of short inpatient hospital stays (PA, OH, NC, MO) for a total of 11 states. This demonstration will also help lower the error rate by preventing improper payments rather than the traditional "pay and chase" methods of looking for improper payments after they occur. The demonstration began on September 1, 2012.

FAQ 15: Can we expect other payers to conduct RAC audits in 2017?

Medicaid has implemented RAC audits. The Affordable Care Act (ACA) requires Medicaid agencies to contract with Recovery Audit Contractors (RACs) to identify and recover overpayments and to identify underpayments. States must also develop processes for entities to appeal RAC determinations, and coordinate RAC efforts with other Federal and state law enforcement agencies. Most states have begun to develop comprehensive Medicaid RAC solutions to meet ACA requirements.

See more at: http://www.medicaid-rac.com/#sthash.V6SqInuD.dpuf

Additional Reading: FY 2014 Report to Congress as Required by Section 1893(h) of the Social Security Act

If you have any questions or comments please email: Medicaid_Integrity_Program@cms.hhs.gov.

Disclaimer 

The American College of Emergency Physicians (ACEP) has developed the Reimbursement & Coding FAQs and Pearls for informational purposes only.   The FAQs and Pearls have been developed by sources knowledgeable in their fields, reviewed by a committee, and are intended to describe current coding practice. However, ACEP cannot guarantee that the information contained in the FAQs and Pearls is in every respect accurate, complete, or up to date. The FAQs and Pearls are provided "as is" without warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability and fitness for a particular purpose. Payment policies can vary from payer to payer. ACEP, its committee members, authors or editors assume no responsibility for, and expressly disclaim liability for, damages of any kind arising out of or relating to any use, non-use, interpretation of, or reliance on information contained or not contained in the FAQs and Pearls. In no event shall ACEP be liable for direct, indirect, special, incidental, or consequential damages arising out of the use of such information or material. Specific coding or payment related issues should be directed to the payer. For information about this FAQ/ Pearl, or to provide feedback, please contact David A. McKenzie, CAE, Reimbursement Director, ACEP at (972) 550-0911, Ext. 3233 or dmckenzie@acep.org.

Updated 01/29/2017

 

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