Frequently Asked Questions: Recovery Audit Contractor

Published 04/22/2021

What mailing address should providers use to send a check to Palmetto GBA instead of waiting for recoupment?
Overpayments Mailing Address: (Checks)
Palmetto GBA
Medicare Finance
Mail Code: AG-260
P.O. Box 100278
Columbia, SC 29202-3278

Overnight Mailing Address: (Checks)
Palmetto GBA
Medicare Finance
Mail Code: AG-260
2300 Springdale Drive
Building One
Camden, SC 29020

If a hospital identifies accounts where there was an error, but the date is beyond the timely submission deadline, what should the provider do?
If the provider cannot perform an adjustment, the provider should submit a check with a completed voluntary refund form for the amount of the overpayment. If the overpayment is discovered at the end of the calendar quarter, providers may submit the overpayment via their quarterly credit balance report with a check for the amount of the overpayment.

Are hospitals required to refund the Medicare Administrative Contractor (MAC) for RAC overpayments or can the hospital wait for the MAC to recoup? If the MAC recoups after the 30 day refund period, will the hospital be charged interest for the days that exceed the 30 day window? Can a facility elect to have an early recoupment from the MAC to avoid interest?
Providers are required to refund the overpayments following receipt of a demand letter. Failure to repay within 30 days will result in the accrual of interest, and for 935-eligible overpayments, such as RAC adjustments, recoupment does not commence until day 41.

If a provider wishes, they may request to be placed on offset prior to day 30. To request an immediate offset, fax your request to 'Immediate Offset' at (803) 419-3275. To ensure your request is handled appropriately, all requests must include:

  • A copy of the first page of the overpayment demand letter you received showing the Account Receivable/Invoice Number
  • Indicate 'IMMEDIATE OFFSET' either on the demand letter or on the fax cover sheet
  • A copy of the spreadsheet identifying the claims included in the overpayment if one was received
  • The name and signature of the person requesting the immediate offset
    • This person should be authorized to make the financial decision to request an immediate offset from future Medicare funds due to your office
  • Please include the authorized person’s telephone number should Palmetto GBA have any questions

Please keep in mind that immediate offset requests can only be honored if there are pending payments in the Medicare claims processing system from which to offset. If there is an insufficient amount of pending payments to satisfy the overpayment, interest will apply if the overpayment is not fully recouped within 30 days.

If the RAC patient account generates a recoupment and repayment on the remittance but the patient has a secondary payer (Medicaid, Blue Cross, etc.), how do the patient accounts with the new patient responsibility get transmitted to the secondary? At what point in the process does this transaction take place?
A RAC recoupment would not be any different from any other recoupment.

What claim adjustment reason codes will be attached to a N432 or N469 Remittance Advice (RA) remark code on the remit?
The N432 and N469 adjustment reason codes for RAC adjustments will be normal adjustment reason codes. Reason codes will correspond to the RAC’s approved issues, which will be on Cotiviti’s website.

Will a provider be able to submit wired money? If so, what are the wiring instructions?
This is not an option at this time.

How will a hospital see the real take back if they have both RAC claims and other claims on the same remittance?
A breakout of the offset is not available. Offsets are applied to the oldest overpayment. In order to avoid offset, the provider may submit a check for any RAC claims or claims subject to 935. In order to avoid offset, the check must be received and applied within 30 days of the date of the demand letter.

Will Palmetto GBA take individual checks per patient or only bulk checks that correspond with the amount on the demand letter?
Palmetto GBA prefers to get one check that corresponds with the amount on the demand letter plus any accrued interest. If paying for some of the claims in the overpayment but not all, a copy of the list of claims received with the overpayment demand letter should be submitted with the check, clearly indicating which claims are being paid, to ensure prompt and accurate application of your check.

What does a hospital do when the demand letter states one amount and the individual patient claim on the RA states another? What are the steps and who should get the call on reconciling the difference? Does Palmetto GBA have someone that handles such correspondence/phone calls?
Inquiries related to RAC initiated adjustments should be directed to the RAC. Note that per CR 7436, the MAC will begin issuing the RAC demand letters effective January 1, 2012.

How will the accounts look on the remittance for both automated and complex reviews?
There will be no difference on the adjustments/remittance advices for automated/complex reviews. These are the methods used by the RAC to identify claims to adjust. Once it is determined that an adjustment is necessary, the adjustment will flow and appear on the RA as it has in the past. The only difference is the new remark code to identify the adjustment was initiated by the RAC. Additionally, the adjustment will not immediately offset since it is subject to 935 limitation of recoupment.

If the hospital allows for recoupment how will the interest portion show on the patient account or will it be in total somewhere else?
Interest will not be reported to the hospital. Interest will be applied based on the demand letter date. The hospital will know the total amount offset which will include interest. Offsets will not be reported to the hospital on an individual patient account basis.

If, during any review from Cotiviti, the patient accounts are listed on the RA but the hospital selects to appeal some and accept the ruling on others, when the hospital looks at these accounts on a RA, how will they see the account? Will there be a difference in the EOB code? Related to this, if the hospital selects to appeal some accounts and the appeal goes through several steps, explain what happens regarding payment and interest during this time.
Adjusted claims show on the RA prior to or in conjunction with the creation of the demand letter. Since an appeal cannot be filed until the claim is adjusted or an overpayment is demanded, the RA will not have any indication of pending appeals. Only adjustments show on the RA, not appeals. If the provider supplies the RAC with documentation prior to the overpayment determination, the claim may not be adjusted if the RAC concurs.

If the provider chooses to appeal some of the claims that were demanded, recoupment will cease on the portion of the overpayment associated with the claims under appeal during the first and second levels of appeal if the appeals are filed within the time frames described in the demand letter. Interest will continue to accrue on the portion of the overpayment associated with the appealed claims and will only be adjusted if the appeal reverses the overpayment determination.

At the third level of appeal, Administrative Law Judge (ALJ), recoupment is not stopped.

If there is an offset without clarification on the RA, how can the provider be sure that the other Medicare auditors know that claim was reviewed/repaid and is, therefore, off limits? How can Medicare know the claim paid properly?
Claims would be selected for review based on claims history. Any claim adjusted (regardless of whether it has been repaid) would not be subject to future adjustment of services that have already been denied.

How do providers give a change in address for RAC correspondence? Can correspondence be sent via overnight mail and to what address? What is the process of identifying electronic health records (EHR) for appeals?
Questions concerning address changes and an overnight mail address for correspondence (review letters only) need to be directed to the RAC. Since the RAC demand letters are issued by the MAC's, questions should be directed to Palmetto GBA concerning these. For an address change, providers would need to submit an updated CMS 855-A. Providers should keep in mind that making this change will also change the address for all correspondence received from Palmetto GBA. Palmetto GBA cannot make address changes specific to the RAC letters at this time. Correspondence should be faxed to the following fax number: (803) 419-3275.

How do you review behavioral health records for medical necessity? For example, have you purchased and implemented the separate Interqual criteria for the behavioral health, not just medical/surgical?
The Palmetto GBA Appeals department has the behavioral health unit. The RAC would need to address if they are using the Interqual criteria.

If providers have recoups (offsets) on the same day they have new N469/N432 notifications, the current lump sum PLB segment will net the two numbers, correct?
No, they will not net the same day they are created. These adjustments create receivables that do not withhold until they reach 41 days old.

If the provider chooses to send a refund check, will there be any acknowledgement on the 835? If so, how will it be shown? Which segment? Which code?
No, check repayments do not flow to the RA.

Providers need an 835 specialist to speak with in order to address questions and concerns. Please provide contact information for Palmetto GBA.
The Provider Contact Center (PCC) is the point of contact for providers and Medicare representatives will be able to answer questions regarding the RA. 

If Palmetto GBA recoups dollars and then providers are required to refund co-payments and deductibles to beneficiaries before the appeal process is completed, can they rebill for those amounts if the appeal is in the provider's favor?
Please review the original documentation in reference to RAC; the beneficiary should never be negatively affected.

Please describe what is supposed to happen during the 'discussion process' (i.e., what, how and with whom)?
The 'discussion process' is an opportunity for the provider to provide additional information to the RAC.  The discussion period offers an opportunity to dialogue with your RAC contractor and communicate your position regarding the RAC’s decision before moving into the appeal process. It is a viable option providers may use to reverse RAC denials and avoid the formal Medicare appeal process. During the discussion period, a provider can request more information from a RAC to better understand the cause for the denial and also provide the RAC with additional information that could potentially result in the reversal of a denial. Providers may also submit additional information (for example, a diagnosis code may have been left off the claim). All RACs are required to allow a discussion period option for each RAC review. Please use the discussion process with the RAC prior to submitting an appeal to Palmetto GBA.

When does the beneficiary receive a letter regarding RAC denials?
Notification for RAC denials would be treated the same as non-RAC denials.

How do Medicare Replacement (MCR) Policies relate to RAC? Are they considered a 'Federal Review' or are they private insurances?
This question should be directed to the RAC.

If a provider refunds and appeals the RAC decision and it goes through all levels of appeal, how does the provider recover the original payment? What if the timely filing period has expired?
If an overpayment is collected and then it is overturned in an appeal, the claim would be adjusted and the money collected would be refunded. The adjustment is not limited based on timely filing. Timely filing only applies to the initial claim. Just because this is a RAC appeal, the appeal process itself does not change. It would follow the normal appeal process.

In an underpayment situation and assuming there are overpayments from which to offset, when will the provider realize payment?
If an overpayment is eligible for offset, any money due the provider will be applied to the overpayment. This includes RAC underpayments. As with any other accounts receivables and underpayments, the remit should reflect these actions.

If a provider receives a RA with type of bill (TOB) _ _H, what does that indicate?
Claims (inpatient and outpatient) with TOBs xxH are related to RAC adjustments. For instance, if a provider had a RA and the claim is listed with a TOB 11H, the provider knows this claim is related to RAC.

A Periodic Interim Payment (PIP) provider only receives the Diagnosis Related Group (DRG) operating outlier portion of the claim. What happens to the remaining amount for the claim?
For inpatient claims on the RA, a PIP provider will only receive the DRG operating outlier portion of the claim and any new technology add-on. The remaining amount of the claim that would have paid should be reflected on the Provider Statistical and Reimbursement System (PS&R) and be paid in the PIP biweekly payments. If the original claim was not paid on the original RA due to the PIP status, the claims would not collect on a RA when an adjustment is made. Rather the amounts would be reflected on the Provider Statistical & Reimbursement system (PS&R) to calculate the PIP rates. A detailed PS&R should show the adjustment. If the adjustment is a RAC 935 adjustment, it usually takes 41 days before the money would collect on an RA. It takes the same length of time for the money to adjust on the PS&R.

How are medical record requests handled for the RAC related appeals?
Palmetto GBA has announced a change in how we handle medical record requests for RAC appeals. Previously, Palmetto GBA was requesting medical records for appeals when the provider had already submitted the records to the RAC. Palmetto GBA will no longer be requesting records in these instances.

It is important to note that providers are responsible for submitting records to the RAC in response to a complex review (a review that involves a full review of all medical records and billing information related to the claim involved) within the timeframe expressed by the demand letter. If records have not been provided to the RAC, as is case for an automated review (based upon data analysis), then it will be necessary for the provider to submit records to Palmetto GBA if an appeal is filed. It is vital that the provider submit records when appealing an automated review to avoid denial of the appeal as not medically necessary. With the immediate implementation of these new procedures, provider concerns about 'duplicate' requests for records should be alleviated.

Would you clarify how the underpayment process works with the RAC underpayments? Is it 41 days from the date of the demand letter like the overpayment, or is it immediate and is it returned?
Once an underpayment is determined and finalized, it takes several days to go out to the provider. The provider should not receive a demand letter from the RAC for an underpayment. The RAC sends out a letter initially letting the provider know of a possible underpayment before the claim is adjusted, but it should be for reference only. If an underpayment occurs, the provider should see it reflect on the Remittance Advice (RA).

Does Palmetto GBA send the provider any communication that states the payment amount due includes the accrued interest for RAC Appeals that have gone to the Quality Improvement Organization (QIO) after the decision?
After the QIO decision, if monies are still due, the provider should receive a 3rd demand letter from Palmetto GBA.

This information was current at the time it was published on the Palmetto GBA website. This document was prepared as a tool to assist providers and is not intended to grant rights or impose obligations. Although every reasonable effort has been made to assure the accuracy of the information within these pages, the ultimate responsibility for the correct submission of claims and response to any remittance advice lies with the provider of services.

The Centers for Medicare & Medicaid Services (CMS) employees, agents, and staff make no representation, warranty, or guarantee that this compilation of Medicare information is error-free and will bear no responsibility or liability for the results or consequences of the use of this guide.

This publication is a general summary that explains certain aspects of the Medicare Program, but is not a legal document. The official Medicare Program provisions are contained in the relevant laws, regulations, and rulings.

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