RAC myths busted

On Dec. 17, 2012, the Centers for Medicare & Medicaid Services (CMS) released Medicare Fee-For-Service Recovery Audit Program Myths. In this article, CMS works to debunk industry-wide myths to help facilities better understand the role the Recovery Auditor Contactors (RACs) play in ensuring proper payment for medically necessary services rendered to Medicare patients.

RACs may find improper payments in several ways. The four listed in the article are:

  • incorrect payment amounts
  • non-covered services (including services that are not reasonable and necessary under section 1862(a)(1)(A) of the Social Security Act),
  • incorrectly coded services (including DRG miscoding)
  • duplicate services

Data from the 2012 Comprehensive Rate Program, regarding length of stay and the projected improper payments, suggests that medically unnecessary services and insufficient documentation are the leading causes of improper payments. The two causes could be closely related; without proper documentation, it would be difficult to substantiate medical necessity.

The article also clears up the rumor that every RAC denial is overturned upon appeal. CMS reports that only 2.4 percent of all 2010 claims have been both challenged and overturned on appeal. Only five percent of all claims collected in 2010 were sent for appeal.

And then, there’s the rumor that RACs have non-clinical personnel conducting audits. In fact, RACs are required to have a full time medical doctor on staff. RACs are also bound to follow all CMS, state and federal rules, laws and guidelines. These laws include the number of audits RACS are allowed to perform per campus. The article also clarifies the hiring and staffing practices required of RACs, which includes that they have a well-rounded team to include certified coders, nurses and therapists.

The article does state that the Medicare Administrative Contractors (MACs) did begin issuing denial letters as of Jan. 1, 2012. The change was in an effort to increase the amount of time providers had to respond to these letters. This action shows CMS’s ability to respond to industry needs. The interest accrual begins when the denial etter is issued.

Read the entire CMS PDF: Medicare fee-for-service recovery audit program myths

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