CMS slows down RAC activity in advance of new auditor contracts

In case anyone was wondering, the RACs haven't gone away for good. They're just taking a vacation.

The Centers for Medicare & Medicaid Services announced a “pause” in RAC audits last month, in preparation for the procurement of the next round of RAC contracts. Officially, "it is important that CMS transition down the current contracts so that the Recovery Auditors can complete all outstanding claim reviews and other processes by the end date of the current contracts." This is the timeline for the wind down of activities:

• February 21 was the last day a Recovery Auditor could send a post-payment Additional Documentation Request (ADR)
• February 28 was the last day a MAC could send prepayment ADRs for the Recovery Auditor Prepayment Review Demonstration
• June 1 is the last day a Recovery Auditor may send improper payment files to the MACs for adjustment

If you believe your contractor is not abiding by this timeline, contact CMS at RAC@cms.hhs.gov.

Hospitals are not standing silent in response to recovery audits. According to the American Hospital Association's latest RACTrac survey, released this week, U.S. hospitals continue to proactively appeal RAC claim denials. Hospitals participating in the quarterly survey reported appealing 49 percent of all RAC denials, and almost half had an appeal overturned in their favor through use of the discussion period before a formal appeal – an increase of 6 percent since the last survey. The survey revealed that "lack of medical necessity" was the top reason Medicare RACs cited to deny claims. But the AHA says nearly two-thirds of those denials were found to be for care that could have been provided on an outpatient basis rather than being deemed medically unnecessary.

In the face of many complaints, CMS says it intends to "refine and improve" the Medicare Recovery Audit Program. The changes that have been made to the program, in response to industry feedback, will be effective with the next RAC program contract awards. They include:

• RACs must wait 30 days to allow for a discussion before sending the claim to the MAC for adjustment. Providers will not have to choose between initiating a discussion and an appeal.
• RACs must confirm receipt of a discussion request within three days.
• RACs must wait until the second level of appeal is exhausted before they receive their contingency fee.
• CMS is establishing revised ADR limits that will be diversified across different claim types (e.g., inpatient, outpatient).
• RACs will be required to adjust the ADR limits in accordance with a provider’s denial rate (providers with low denial rates will have lower ADR limits while providers with high denial rates will have higher ADR limits).

If you have additional suggestions, be sure to let CMS know.