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Medicare to Suspend RAC Document Requests Until New Contracts in Place

Wednesday, February 26, 2014

By James Swann  

Feb. 20 --The Centers for Medicare & Medicaid Services Feb. 18 said it will suspend the ability of Recovery Auditor Contractors to request documents associated with claims reviews until it finishes the procurement process for new RAC contracts.

The pause in additional documentation requests (ADRs) is intended to allow the CMS to wind down the current RAC contracts and allow the RACs to finish any outstanding claims reviews, the CMS said in an update posted to its website.

The CMS also said the suspension would help efforts to improve the RAC program and said it “is reviewing the Additional Documentation Request (ADR) limits, timeframes for review and communications between Recovery Auditors and providers.”

ADRs include supporting medical records that can help a RAC make a determination as to whether to approve or deny a claim.

Feb. 21 will be the final day that RACs will be able to send an ADR, and Feb. 28 will be the last day that Medicare Administrative Contractors (MACs) will be able to send prepayment ADRs associated with the RAC prepayment review demonstration pilot.

The prepayment review demonstration pilot began in September 2012 and covers 11 states that either have a high risk of fraud or high claims volumes for short inpatient hospital stays.

MACs began conducting the prepayment reviews for short inpatient hospital stay claims in October 2013.

Some Relief for Hospitals

Melissa Jackson, a senior associate director of policy at the American Hospital Association, said the pause in RAC ADRs will give hospitals some relief.

“However, it won't address the multi-year backlog that inappropriate RAC denials have created in the Medicare appeals system and won't provide hospitals with long-term relief from the substantial burden of RAC audits,” Jackson said in a Feb. 20 statement.

Jackson said hospitals still have to undertake a multiyear appeals process to receive Medicare payments for medically necessary services.

“This is why hospitals will continue to push for significant RAC reforms, such as those in H.R. 1250, the Medicare Audit Improvement Act of 2013,” Jackson said.

The Medicare Audit Improvement Act of 2013 was introduced in March 2013 in both the House (H.R. 1250) and Senate (S. 1012).

The bill, which has 185 bipartisan sponsors, includes measures to improve the accuracy of RAC audits as well as increase contractor transparency (25 MCR 191, 2/14/14).

Not All Support Pause

The American Coalition for Healthcare Claims Integrity, a group comprising health-care program integrity contractors, said it was disappointed in the announcement that the CMS would be pausing RAC ADRs.

“The RAC program recovers more than $1 billion per quarter in misused Medicare funds, while reviewing only 2 percent of medical records,” ACHCI spokeswoman Becky Reeves said in a Feb. 20 statement.

“Constraints to the program like this compromise these savings, perpetuate rampant waste in Medicare, and weaken our healthcare system overall,” she said.

RAC Program Revisions

In addition to announcing the ADR suspension, the CMS Feb. 18 also released some changes to the RAC program that will take effect under the new contracts.

The changes, which were made in response to industry concerns, include requiring RACs to wait 30 days after making a claims determination before sending the claim to the MAC for adjustment.

As a result, the CMS said, “Providers will not have to choose between initiating a discussion and an appeal.”

Previously, RACs were required to stop the discussion period upon learning an appeal had been filed.

The discussion period allows a provider to talk with a physician from the RAC about the merits of the claims denial.

Other changes include:

• requiring RAC to confirm that they have received a provider's discussion request within three days;

• preventing RACs from being paid their contingency fee “until the second level of appeal is exhausted”;

• creating separate ADR limits for different claims types; and

• requiring RACs to adjust the amount of ADRs a provider can receive based on their denial rate. If a provider has a low denial rate, then it will receive fewer ADRs, and vice versa.

 

The current RAC contracts were due to expire in February, but the CMS announced in January that they would be extended for several months.

The new RAC contracts are expected to run from 2014 to 2018.

At the National RAC Summit in December 2013, several state hospital association executives said they were concerned about the possibility of having new RACs in their region once the contracts are finalized.

 

To contact the reporter on this story: James Swann in Washington at jswann1@bna.com

To contact the editor responsible for this story: Ward Pimley at wpimley@bna.com


The CMS update is at http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-Program/Recent_Updates.html.

The CMS RAC improvements are at http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-Program/Downloads/RAC-Program-Improvements.pdf.

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