1. Tax Relief and Health Care Act of 2006, § 302, authorized full implementation by 2010 of Medicare post-payment audits of fee for service Part A and B providers by four Recovery Audit Contractors (RACs).  The contracts have been awarded.  The Patient Protection and Affordable Act (PPACA) expanded RAC to Medicare Parts C and D, and Medicaid programs.

2. RACs audit a percentage of claims based on volume, retroactive three fiscal years from the date the claim was paid, but not for any claims prior to October 1, 2007.

3. The number of records that can be audited based on provider type are limited to:

• Home Health, Outpatient Hospital and other Part A billers: 1 percent of average monthly Medicare services (maximum of 200) per 45-day period, per NPI.
• Hospice, Inpatient Hospital, Skilled Nursing Facility, or Inpatient Rehabilitation Facility: 10 per cent of the average monthly paid Medicare claims (maximum of 200) per 45-day period, per NPI.
• Physician: depends on the size of the group, partnership or solo practice.
• DME, Lab and other Part B suppliers: limit is 10% of all claims submitted for the previous full calendar year, divided into 8 periods of 45 days. Limits based on suppliers’ Tax Identification Number (TIN). If national supplier has claims paid by all 4 DME MACs claims can be reviewed by all RACs.
• Effective January 28, 2010, CMS has modified limits in Fy2010 for institutional providers.  Each RAC will establish yearly “caps per campus” on the number of medical records requested per 45-day period.  A campus unit will be based on the provider/supplier’s Tax Identification Number (TIN) and ZIP Codes.  Other limits are explained at RAC@cms.hhs.gov.

RACs will not review records that are the basis of a voluntary disclosure accepted by Medicare.  Eventually, medical records on CD or DVD will be accepted.

4. AUTOMATED REVIEW PROCESS

• RACs can utilize an Automated  Review, which is a demand for repayment without reviewing your medical records referred to as “data mining.”
• The overpayment determination is made without contacting the provider for any information on the claims denied.
• There is no review of medical record because:

  a. There is a clear policy that is the basis for the denial.  “Clear policy” means a statute, regulation, National Coverage Determinations (NCD), Local Coverage Determinations (LCD) or CMS manual, that specifies the circumstances under which payment for a service will always be denied;
  b. The denial is based on a medically unbelievable service, such as removing two gall bladders from the same patient; or
  c. Failure to respond to a request for medical records within the 45 day deadline.

5. COMPLEX REVIEW PROCESS

• RACs will conduct a Complex Review of requested medical records if there is a high probability that the service is not covered.
• The RAC review team, which consists of RNs, certified coders and a Medical Director,  makes coding and medical necessity determinations based on NCD, LCD and CMS manuals

6. RACs are paid a contingency fee of 9 per cent to 12.5 per cent of the amounts recouped or underpaid.   RACs can use statistical sampling and extrapolate findings to calculate the overpayment.  If the provider wins at any level of appeal, the RAC cannot keep the contingency fee it has been paid, and interest may be returned under certain circumstances.

7. Medicare Administrator Contractors (MACs) will recoup by offset unless provider pays by check or commences a valid appeal.  Recoupment is stayed during first two levels of appeal, redetermination and reconsideration; however interest continues to accrue.

8. CMS approves RAC audit issues and they are posted on RAC Web sites.  RAC validator contractor, Provider Resources, Inc. of Erie, PA, works with CMS to approve new audit issues.

9. APPEALS

a. You can appeal the denied claims in a RAC overpayment determination within 15 days of a RAC demand letter by submitting a rebuttal, and/or request a meeting, i.e., the discussion period.  This is not part of the formal appeal process.
b. The regular appeal process applies with deadlines specified by regulations.  Note:  42 C.F.R. § 405.942(a)(1), § 405.962(a)(1), and § 405.1102(a)(2) state that the date of receipt of a redetermination, a reconsideration, or an Administrative Law Judge (ALJ) decision, is presumed to be 5 days after the date of the notice, here the demand letter, unless there is evidence to the contrary.
c. The date on the demand letter starts the 30 day period for the MAC to send you the recoupment letter, and the 15 day period for you to request a discussion meeting with the RAC.  The discussion period can be longer than 15 days, if the RAC agrees.
d. A provider has 120 days from the date of the demand letter to file a request for redetermination.  The MACs, Fiscal Intermediaries (FI) and Carriers, hereinafter referred to collectively as MAC, can begin recoupment on the 41st day after the date of the demand letter, unless the MAC receives a request for redetermination within 30 days from the date of the demand letter (not 30 days from the date of receipt).  Note:  If the additional 5 days for mailing applies, these timeframes may be longer.
e. If the redetermination decision is not favorable, a provider has 180 days to file a request for reconsideration with the Qualified Independent Contractor (QIC).  Note:  This is the last stage to submit additional evidence absent a showing of good cause.
f. The MAC can begin recoupment on the 61st day after the unfavorable redetermination notice, unless the provider files a request for reconsideration within 60 days.
g. If the reconsideration decision is not favorable, a provider has 60 days to file an appeal to the Office of Medicare Hearings and Appeals, ALJ level.  During this level of appeal, and any following levels of appeal (Medicare Appeals Council and Federal District Court), CMS will recoup the overpayment.
h. The RAC or CMS may decide to have an active role in the appeal process as a “party” or “participant.”  Participation includes filing position papers or providing testimony, but not calling witnesses or cross examination. CMS or the RAC may not be called as a witness.  See 42 C.F.R. § 405.1010.  As a “party” CMS or the RAC may file position papers, provide testimony, call witnesses and cross examine witnesses.  See  42 § 405.1012

10.    BEST DEFENSE IS AN INTERNAL COMPLIANCE AUDIT

• Conduct an internal compliance audit of applicable risk areas, i.e. OIG, CERT reports, under the direction of a health care attorney and attorney client privilege.
• Correct your billing issues before RAC does an audit and demands a recoupment.
• www.cms.hhs.gov/rac;  www.oig.hhs.gov/reports.asp; www.cms.hhs.gov/cert; www.raclawexpert.com; www.raclawappeals.com; www.cms.hhs.gov/OrgMedFFSAppeals/Downloads/AppealsprocessflowchartAB.pdf; www.cms.hhs.gov/MLNMattersArticles/downloads/MM6183.pdf;  
  

11.    Other RAC Contractors:

• Region A – Diversified Collection Services, Inc. of Livermore, California (subcontracting some audits to PRG-Shultz, Inc.) in Massachusetts, Maine, New Hampshire, New York, Rhode Island, Vermont, Connecticut, District of Columbia, Delaware, Maryland, New Jersey and Pennsylvania.
• Region B – CGI Technologies and Solutions, Inc. of Fairfax, Virginia (subcontracting some audits to PRG-Shultz, Inc.) in Indiana, Michigan, Minnesota, Illinois, Kentucky, Ohio and Wisconsin.
• Region C – Connolly Consulting Associates, Inc. of Wilton, Connecticut (subcontracting some audits to Viant Payment Systems, Inc.) in Colorado, Florida, New Mexico, South Carolina, Oklahoma, Tennessee, Texas, Virginia, and West Virginia.
• Region D – HealthDataInsights, Inc. of Las Vegas, Nevada (subcontracting some audits to PRG-Shultz, Inc.) in Arizona, Montana, North Dakota, South Dakota, Utah, Wyoming, Arkansas, California, Hawaii, Idaho, Iowa, Kansas, Montana, Nebraska, Nevada, Oregon and Washington..
  

For more information, contact the authors listed below or the Arent Fox attorney with whom you usually work.

Arent Fox LLP

Connie A. Raffa
raffa.connie@arentfox.com
212-484-3926

Rachel Hold-Weiss
hold-weiss.rachel@arentfox.com
212-484-3999