The Centers for Medicare & Medicaid Services (CMS) recently announced aggressive new steps to find and prevent waste, fraud and abuse in Medicare. CMS is working closer with beneficiaries and providers, consolidating its fraud detection efforts, strengthening its oversight of medical equipment suppliers and home health agencies, and launching the national RAC program.
The Recovery Audit Contractor (RAC) program was originally created by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA). Congress directed the Department of Health and Human Services to conduct a three-year demonstration program using Recovery Audit Contractors (RACs) to detect and correct improper payments in the Medicare Fee for Service program. The program was designed to determine whether the use of RACs would be a cost-effective means of adding resources to ensure correct payments are being made to providers and suppliers and, therefore, protect the Medicare Trust Fund. The national RAC program is the outgrowth of a successful demonstration program that used RACs to identify Medicare overpayments and underpayments to health care providers and suppliers in California, Florida, New York, Massachusetts, South Carolina and Arizona.
The demonstration resulted in over $900 million in overpayments being returned to the Medicare Trust Fund between 2005 and 2008 and nearly $38 million in underpayments returned to health care providers. The demonstration ended on March 27, 2008.
The CMS has taken the next steps in the agency’s comprehensive efforts to identify improper Medicare payments and fight fraud, waste and abuse in the Medicare program by awarding contracts to four permanent Recovery Audit Contractors (RACs) designed to guard the Medicare Trust Fund.
In the Tax Relief and Health Care Act of 2006, Congress required a permanent and national RAC program which requires the Secretary to expand the program to all 50 states by January 2010. By 2010, CMS plans to have 4 RACs in place. Each RAC will be responsible for identifying overpayment and underpayments in approximately one quarter of the country. The new RAC jurisdictions match the DME MAC jurisdictions. For those who are interested, CMS has a web page describing their strategy for expanding from a 3-state demonstration RAC Program to a 50-state permanent RAC program and a map showing proposed RAC jurisdictions.
The goal of the recovery audit program is to identify improper payments made on claims of health care services provided to Medicare beneficiaries. Improper payments may be overpayments or underpayments. Overpayments can occur when health care providers submit claims that do not meet Medicare’s coding or medical necessity policies. Underpayments can occur when health care providers submit claims for a simple procedure but the medical record reveals that a more complicated procedure was actually performed. Health care providers that might be reviewed include hospitals, physician practices, nursing homes, home health agencies, durable medical equipment suppliers and any other provider or supplier that bills Medicare Parts A and B.
The New National Recovery Audit Contractor (RAC) for Jurisdiction 1 is:
Health Data Insights, Inc. of Las Vegas, Nevada
Phone Numbers: Part A: (866) 590-5598, Part B: (866) 376-2319
e-mail: racinfo@emailhdi.com
The new RACs (for this and other jurisdictions) were selected under a full and open competition. The RACs will be paid on a contingency fee basis on both the overpayments and underpayments they find. Each RAC's contingency fee is established during contract negotiations with CMS and, as such, the contingency fee varies for each RAC. The selection of the new contractors was based on a best value determination for the Federal government that included a sound technical approach for the level and quality of claim analysis and detail to exceptional customer service, conflict of interest reviews and lowest contingency fee.
RAC Provider Education Activities
As part of preparing Medicare providers for the RAC program as it is phased in nationally, CMS will continue working closely with national and state medical, hospital and nursing home associations to strengthen relationships to be more proactive and anticipate the needs and concerns of health care providers. Before work begins, the RACs will hold Town Hall type meetings in each state with health care providers and CMS staff and representatives from the RACs. Health care providers can get more information about these meetings and the date the program will begin in their states by checking the CMS RAC Web site at: www.cms.hhs.gov/RAC/
CMS is also using lessons learned from the RAC demonstration to make improvements in the permanent RAC program. For example, the program will be more transparent by listing the types of issues undergoing review on each of the RACs’ Web sites. Each RAC will also employ a full-time medical director to help in the review of claims. Soon after outreach efforts are made, some health care providers in the states that are part of the first phase may begin to receive either requests for medical records or a letter requesting that an overpayment be repaid for their claims that were submitted to and paid for by Medicare. To prepare for the start of the program, health care providers should consider conducting an internal assessment to ensure that submitted claims meet the Medicare rules. Other steps that providers should take include:
- Identifying where improper payments have been persistent by reviewing the RACs’ Web-sites and identifying any patterns of denied claims within their own practice or facility
- Implementing procedures to promptly respond to RAC requests for medical records
- If the provider disagrees with the RAC determination, filing an appeal before the 120-day deadline
- Keeping track of denied claims and correcting these previous errors
- Determining what corrective actions need to be taken to ensure compliance with Medicare’s requirements and to avoid submitting incorrect claims in the future
CMS will continue to monitor the efforts of the RACs to ensure they are providing sufficient information and undertaking outreach activities to reach all the health care providers in their regions so no provider feels unreasonably burdened.
For more information on the Permanent RAC Program and to view the evaluation report on the three-year RAC demonstration, visit: www.cms.hhs.gov/RAC.
The CMS is continuing to build on their fraud fighting and program integrity efforts by identifying high risk areas and trends to better focus limited funds and resources. Medicare is required by law to pay claims to health care providers for services provided to beneficiaries within 30 days after the claim is submitted, as long as the claim meets Medicare’s rules. After the claim is paid, CMS or its contractors can review the claim to ensure that the items or services were actually provided or the services were medically necessary. If the claim was not submitted under Medicare’s rules, CMS checks to see if the claim was submitted in error or may be potentially fraudulent. Those claims that could be fraudulent are referred to law enforcement for further investigation.
CMS announced it has contracted with Provider Resources, Inc, of Erie, PA, to work as the Recovery Audit Contractor (RAC) Validation Contractor. The RAC Validation Contractor (RVC) will work with CMS and the RACs to approve new issues the RACs want to pursue for improper payments, as well as perform accuracy reviews on a sample of randomly selected claims on which the RACs have already collected overpayments. The RVC is another tool CMS will use to provide additional oversight and ensure that the RACs are making accurate claim determinations in the permanent program.
The RAC demonstration program has proven to be successful in returning dollars to the Medicare Trust Funds and identifying monies that need to be returned to providers. It has provided CMS with a new mechanism for detecting improper payments made in the past, and has also given CMS a valuable new tool for preventing future payments.
For concerns about the RAC Program, you may contact the RAC Project Officer at: www.RAC@cms.hhs.gov.