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Mission Possible: Surviving a Recovery Cost Audit (RAC) Part Two Leah Klusch, RN, BSN, FACHCA Presentation Objectives • Identify the structure of the RAC Audit Process • Describe the Audit Process and facility preparation for audits • Review the Audit Appeals Process The Universal Program Number (UPN) for this presentation is 2009-21-1088 1.5 CE Leah Klusch discloses no actual or potential conflict of interest in relation to this program. " " "Medicare Recovery Audit Contractors ProgramLeah KluschMedicare Recovery Audit Contractors ProgramPresented byLeah KluschExecutive DirectorThe Alliance Training Center330-821-7616leahklusch@sbcglobal.netWhat is the RAC?RAC Program Missionq The RACs will detect and correct pastimproper payments so that CMS and the Carriers/FIs/MACs can implement actions that will prevent future improper payments.Providers can avoid submitting claims that don t comply with Medicare rulesCMS can lower its error rateTaxpayers and future Medicare beneficiaries are protected1 " " " " " " " " "Medicare Recovery Audit Contractors ProgramLeah KluschRAC Legislationq Medicare Modernization Act, Section 306:required 3-year RAC demonstrationq Tax Relief and Healthcare Act of 2006, Section 302:requires a permanent and nationwide RAC program by no later than 2010Both statutes gave CMS the authority to pay RACs on ...

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Mission Possible: Surviving a Recovery Cost Audit (RAC) Part Two

Leah Klusch, RN, BSN, FACHCA

Presentation Objectives

• Identify the structure of the RAC Audit Process
• Describe the Audit Process and facility preparation for audits
• Review the Audit Appeals Process


























The Universal Program Number (UPN) for this presentation is 2009-21-1088
1.5 CE
Leah Klusch discloses no actual or potential conflict of interest in relation to this program. "
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Medicare Recovery Audit Contractors Program
Leah Klusch
Medicare Recovery Audit
Contractors Program
Presented by
Leah Klusch
Executive Director
The Alliance Training Center
330-821-7616
leahklusch@sbcglobal.net
What is the RAC?
RAC Program Mission
q The RACs will detect and correct past
improper payments so that CMS and the
Carriers/FIs/MACs can implement actions
that will prevent future improper payments.
Providers can avoid submitting claims that don t
comply with Medicare rules
CMS can lower its error rate
Taxpayers and future Medicare beneficiaries are
protected
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Medicare Recovery Audit Contractors Program
Leah Klusch
RAC Legislation
q Medicare Modernization Act, Section 306:
required 3-year RAC demonstration
q Tax Relief and Healthcare Act of 2006,
Section 302:
requires a permanent and nationwide RAC
program by no later than 2010
Both statutes gave CMS the authority to pay RACs on
contingency fee basis
RAC Review Process
q RACs review claims on a post payment basis
q RACs use the same Medicare policies as FIs, Carriers and MACs
NCDs, LCDs & CMS manuals
q Two Types of review:
Automated (no medical record needed)
Complex (medical record required)
q RACs will NOT be able to review claims paid prior to October 1, 2007
RACs will be able to look back three years from the date the
claim was paid
q RACs are required to employ a staff consisting of nurses, therapists,
certified coders & a physician CMD
RAC Purpose
q To detect and correct overpayments
and underpayments
Refund underpayments to the providers
Collect overpayments from the providers
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Medicare Recovery Audit Contractors Program
Leah Klusch
Medicare Received 1.2 billion claims per
year:
q 4.5 million claims per work day
q 574,000 claims per hour
q 9,579 claims per minute
Reasons for Incorrect Payment*
q Payments are made for services that do
not meet Medicare s medical necessity
criteria
qProviders fail to submit documentation
when requested, or fail to submit enough
documentation to support the claim
*The Medicare Recovery Audit Contractor Program: An Evaluation of the 3-
Year Demonstration, June 2008
Reasons for Incorrect Payment* (con t)
q Providers fail to submit documentation
when requested, or fail to submit enough
documentation to support the claim
qOther reasons, such as basing claim
payments on outdated fee schedules
*The Medicare Recovery Audit Contractor Program: An Evaluation of the 3-
Year Demonstration, June 2008
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Medicare Recovery Audit Contractors Program
Leah Klusch
Follow the Money!
q Review data sources
q Convert data to information
q Research difficult to code/bill areas
q Review each issue
q Perform chart and claim audit
q Communicate results
Background: Demonstration Program
q RACs were used to identify over and
underpayments in:
California
Florida
New York
Massachusetts
South Carolina
Arizona
Background: Demonstration Program
(con t)
q Between 2005 and 2009, the RACs
indentified:
900 Million in overpayments
38 Million in underpayments
96% of the claims were overpayments and
only 4% were underpayments
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Medicare Recovery Audit Contractors Program
Leah Klusch
Goal of the RACs
q To identify improper payments made on
claims for health care services provided to
Medicare Beneficiaries
Goal of the RACs (con t)
q The RAC program is designed to:
Detect and correct past improper payments in the
Medicare FFS program
Provide information to CMS and Medicare
contractors to help prevent fraud in the future and
to lower the claims payment error rate
Recovery Audit Contractor Winners
q Diversified Collection Services, Inc. of
Livermore, California (Region A) initially
working in Main, New Hampshire,
Vermont, Massachusetts, Rhode Island
and New York
q CGI Technologies and Solutions, Inc. of
Fairfax, Virginia (Region B) initially
working in Michigan, Indiana, and
Minnesota
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Medicare Recovery Audit Contractors Program
Leah Klusch
Recovery Audit Contractor Winners
(con t)
q Connolly Consulting Associated, Inc. of
Wilton, Connecticut (Region C) initially
working in South Carolina, Florida,
Colorado and New Mexico
q HealthDataInsights, Inc. of Las Vegas,
Nevada (Region D) initially working in
Montana, Wyoming, North Dakota, South
Dakota, Utah, and Arizona
General Information about RACs
q RACs are paid on a contingency basis
If the claim is overturned on appeal, the RAC
must repay its fee
The types of issues undergoing review will be
listed on each RACs website
General Information about RACs
(con t)
q Each RAC must hire a full time medical
director
q From inception through March 27, 2008, it
cost the RACs only .20 to collect a dollar
q During the demonstration program RACs
collected $187.2 million in contingency
fees.
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Medicare Recovery Audit Contractors Program
Leah Klusch
Improper Payments
q Improper payments were estimated at
10.8 billion dollars in 2007
Improper Payments (con t)
q The main reasons for the improper
payments were:
Payments were made for services that don t
meet Medicare medical necessity
requirements
Payments were made for services that are
incorrectly coded
Improper Payments (con t)
q The main reasons for the improper
payments were:
Providers failed to submit documentation
when requested, or
Fail to submit enough documentation to
support the claim
7Medicare Recovery Audit Contractors Program
Leah Klusch
Automated Reviews
q RACs use proprietary techniques to
indentify claims that clearly contained errors
resulting in improper payments and those
that likely contained errors resulting in
improper payments
q In the case of a clear improper payment,
the provider is contacted and an
overpayment is requested or the
underpayment paid.
Complex Reviews
q If the claim contains likely errors, the RAC
can ask for medical records
q Very expensive process
q Clinical staff will review records
q Hospice and home health services claims
were excluded fro the demonstration
q Can request education from the RACs
Medical Director
Steps Provider Can Take To Be Ready for RAC
Audits
q Conducting an internal assessment to
ensure that submitted claims meet the
Medicare rules
q Identify areas of concern by looking at the
RAC websites and assess their own
claims in light of the RAC findings
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Medicare Recovery Audit Contractors Program
Leah Klusch
Steps Provider Can Take To Be Ready for
RAC Audits (con t)
q The RACs often chose to review services
highlighted by the OIG and GAO
q Implement procedures to promptly
respond to RAC request for medical
records.
q Keep track of denied claims and correct
previous errors.
Steps Provider Can Take To Be Ready for
RAC Audits (con t)
q When necessary develop corrective
action plans to respond to denied claims
q Developing a good working relationship
with referring providers.
Appeals
q Provider has 120 days from the claim
adjustment to file and appeal
q Appeal process is handled by regular
Medicare claims process
q As of March 27, 2009, only 14% of the
RAC determinations were appealed and
only 4.6 percent were overturned on
appeal
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