Recovery Audit Contractors: Modern Day Bounty Hunters

Sept. 6, 2009 - PRLog -- The Recovery Audit Contractor (RAC) Program is a review process that works by compensating private contractors a percentage of the inappropriate Medicare payments the contractors identify during audits. While the RAC Program is not necessarily a new tool, the Center for Medicare & Medicaid Services (CMS) has expanded and made permanent the use of the Program, which will use private contractors to audit health care providers around the State. Because of how the RACs are compensated, they have strong incentives to root out inappropriate payments because of the contingency fee waiting for them on the other side -- the modern day bounty hunters.

In the beginning, the RAC Program started as an effective federal demonstration project, identifying $1.3 billion in incorrect payments, including $933 million in overpayments and $38 million in underpayments. Given the amount of recouped payments, it was not surprising when CMS announced a nationwide implementation of the RAC Program.  If providers have not yet started to clean their homes in preparation of the audits, here are some things to consider:

TYPES OF AUDITS: The RACs will perform two types of audits, which will focus on both coding and medical necessity. The first type of audit will be an automated review covering data only (no medical records) and is designed to identify clear instances of inappropriate payments, such as duplicate payments. The second type of audit will consist of a more detailed review focusing on likely or potential errors. During the more detailed review, the RACs will request medical records from providers from which the RACs will hope to identify billing errors and/or inconsistencies. If the RAC contractors identify improper payments, the provider will be able to appeal the determination. There are five levels of appeal, starting with a request for re-determination with the provider's fiscal intermediary and progressing from there. Providers should keep in mind that the RAC appeals process can be complex and strict deadlines apply. For instance, once a provider receives notice that a RAC has requested medical records for a detail review, that provider has only 45 days in which to produce the records.

HOW TO PREPARE: Depending on a provider's individual situation, preparations might include the following:

- Identifying a RAC response leader who will be the primary point of contact with the RAC.

- Assembling a team of professionals responsible for providing information in response to RAC requests, including health information managers, compliance officers, finance personnel, legal counsel and medical staff representatives.

- Conducting an internal audit to identify medical record and payment problems before the RAC audit.

- Conducting RAC training sessions to prepare key personnel for the RAC audits.

- Identifying and filling gaps in staffing, IT systems and/or records management.

Being prepared for RAC audits and potential appeals will have numerous benefits - Prepared healthcare providers will likely spend less money responding to audit requests, will be better positioned to challenge questionable determinations, will be prepared to file timely appeals and will encounter less overall disruption in their day-to-day operations. Good strategic planning in preparation of the audits should help Indiana healthcare providers have fewer risks, fewer distractions, fewer expenditure for outside compliance auditors, fewer penalties and hopefully, better outcomes in the long run.

How Payment Automation Network can help:

Our team will provide a base-line audit on your documentation and billing practices. Our report will allow you time to make any needed changes in your current practices billing and coding procedures.  Call Toll (800) 813-3740  or visit  www.PaymentAutomation.net

# # #

Payment Automation Network, Inc. specializes in helping medical providers and businesses increase their cash flow. We offer Full-Service Billing and Receivable Collections.