Is your care center ready for another audit? The Medicare Recovery Audit Contractors (RAC’s) are here. Do you know what they are looking for? Can you afford to have money taken out of your Medicare checks? How can you prepare for this process?
According to the Centers for Medicare and Medicaid Services (CMS), the goals of the RAC’s are to reduce improper Medicare payments through the efficient detection and collection of overpayments and identify underpayments. In addition, they are tasked to implement actions that will prevent future improper payments. RAC’s will be looking at health care agencies that bill Medicare or Medicaid including inpatient hospitals, Skilled Nursing Facilities (SNFs), durable medical equipment suppliers and home health care agencies. Is your business ready? How well does your care center know Medicare billing rules?
A demonstration project took place for three years in six different states: New York, Florida, California, Arizona, South Carolina and Massachusetts. The results of the project were significant enough for CMS to create a permanent placement for the RAC’s. According to data released from CMS, there were $1.03 billion in improper Medicare payment to providers, with 95% overpayments. $900 million was returned to the Medicare Trust Funds and $38 million in underpayments were paid to providers.
Who is auditing your medical bills prior to submission? Do you know what is considered an improper payment? Even if you know what is considered an improper payment, are you confident that your staff knows? According to CMS, the following are considered improper payments: incorrect payments amounts; payments for non-covered services; incorrectly coded services; payments for duplicative services; payments for services that were not reasonably necessary; and insufficient medical documentation for a service. How many of these improper payments has your care center processed?
According to CMS, there will be some differences between the demonstration program and the permanent program. Regardless, the time has come for the auditors to look at claims from October 1, 2007, and forward. Four companies will execute the audits and will divide the country into four sections. This process is happening now. Are you ready?
Did you know that you can appeal if overpayment is established? If overpayment is established, recovery of that amount will be necessary. However, prior to paying the amount, the provider has five different levels of appeal they can pursue. Many providers question the importance of the appeal process. The answer to that question lies within the results of the demonstration report that was issued by CMS this past January. Of the more that $525,000 overpayment determinations made by the RAC during the pilot program, approximately 22% were appealed by providers. Of these appeals, 34% were decided in favor of the provider, resulting in a total of 7.6% of all RAC determinations ultimately being overturned. When it comes to being audited, the more you know, the less painful the process becomes.
In addition to knowing about the appeal process, care centers should also realize that RAC’s collected $187,000,000 on contingency fees based upon the amount of erroneous payments they identified. During the demonstration project, RACs collected contingency fees even if the outcome of appeals of overpayment determinations went in favor of providers. The RACs’ contingency fees are based on the amount of erroneous payments they identify. This means that the RAC’s will be diligent in their audits to find errors if there are any.
By knowing what the auditors are looking for, and looking at your internal processes of billing and reviewing, you will be better prepared to be visited by an RAC. If you have more questions regarding the process, please consider attending,
“Medicare Recovery Audit Contractors (RACs); Help Avoid the "Wrath" of RACs” provided by Pathway Health Services on May 15, 2009. For more information on this workshop, and others, please visit
http://www.pathwayhealth.com/classes/fec.aspx.