The demonstration project began as a three year program with two types of RACs - Medicare Secondary Payor (MSP) RACs and Claim RACs. CMS instructed the MSP RACs to focus on finding improper payments made by Medicare that other health insurance companies should have paid. On the other hand, Claim RACs were instructed to identify improper payments made for services that did not qualify for payment.
II. RAC Audits and Extrapolations
It is essential to remember that the RACs' business model is based almost entirely on their ability to identify provider overpayments. RACs are paid on a contingency basis for all accurately identified overpayments. They also receive a percentage for all underpayments identified. The contingency fee paid by CMS is a negotiated amount may vary from RAC to RAC. While private insurers have used this type of payment methodology to pay claims auditors for many years, the RAC demonstration project was the first time CMS had employed a contractor on a contingency fee basis. The contingency fee payment methodology is what makes RACs unique from other Medicare auditing contractors, which are paid through funds appropriated by Congress. We find it especially ironic that HHS-OIG has long criticized third-party billing companies who process Medicare claims for providers because most are paid on a percentage-billed or collected basis, arguing that such a payment methodology incentivizes the billing
Responding to a RAC Audit
Upon learning of a RAC review or review, providers take great care to appropriate respond. Steps that we take when responding on behalf of our clients include, but are not limited to: (1)Reviewing the dates of the claims to determine whether the RACs reviewed the claims in a timely manner. (2) Reviewing the basis for the denials of the claims and check the denial reasons with the Medicare policies in place for the services at issue. (3) Evaluating the credentials of the RAC reviewer and determine whether they meet industry standards. (4) Reviewing any prior claims audits to determine whether another contractor may have previously audited the claims. (5) Ensure that medical records and supporting documentation are forwarded within the time period required. RACs are permitted to count claims as an overpayment if medical records are not received in a timely fashion.(6) If additional time is needed to properly assemble the medical records required, immediately request an extension.
Appeals of claims denials can be complicated. It is imperative that appeals be initiated as soon as possible. Statutory deadlines must be met in order for an appeal to remain valid. Having said that, claims denials must be properly assessed so that supporting briefs and documentation in support of the claims may be presented in a persuasive fashion.
Notably, as part of the pilot program, health care providers chose to appeal only approximately 14% of RAC overpayment determinations. Only approximately 4.6% of RAC rulings were ultimately fully or partially overturned in favor of the providers.
Our firm is experienced in reviewing and assessing overpayment determinations and working with providers to aggressively seek the payment of improperly denied claims. Should you have questions regarding the RAC process, please call us at 1(800) 475-1906.
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