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RAC Audits Compliance

July 31, 2012

RAC CompliancePatient records, billings, and medical codes can make it difficult to accurately track patient information, especially when Medicare is involved. As a government funded program, Medicare provides government funding for healthcare expenses for certain Americans. Individuals over the age of 65, under the age of 65 with certain diseases, and any patient with End Stage Renal Disease is eligible to apply for and obtain these benefits. 

Compliance Challenges
Although this program is beneficial for patience, it can be difficult for providers to provide total compliance. Therefore, a Recovery Audit Contractor (RAC) was implemented in order to identify improper Medicare payments. Due to numerous regulations and restrictions, it is relatively simple for institutions to incidentally override compliance with these regulations. 

One of the major challenges that institutions face is proper coding. The coding process must be completed in an accurate and timely manner in order to avoid non-compliance. Ensuring the completion of documentation and maintenance of medical records is also common pitfall for healthcare institutions. One small error can lead to larger issues and additional errors that may result in overpayment or underpayment. 

Identifying Potential Erroneous Areas
Oftentimes, RACs have reason to believe that certain facilities have been erroneously charging Medicare and patients for healthcare procedures and testing. However, there are certain “red flags” that RACs search for in order to catch recurring errors or larger absences within a facility. One main area of vulnerability includes overcoding high levels of services. Certain types of hospital care have a preset number of levels, so anything over that number can be a red flag for RACs as an indication of Medicare overbilling. Furthermore, large group practices are often targets, due to the increased number of physicians. Multiple physicians within one practice increases the chance of discovering a Medicare billing issue.

Preparing for an RAC Audit
One of the best practices for hospitals is to include an RAC response team in their staff. This team can use RAC tracking tools to identify specific issues and how to address them. In addition, a tracking tool is essential for maintaining data and finding information quickly. This increases the likelihood that individuals within the organization will discover errors before they are unable to be recovered. Pooling together members from health information coding, case management, finance, revenue, the business office, billing and compliance division is essential in resolving farther issues, as well.

An RAC audit is used to identify underpayments and overpayments made to Medicare providers. Overpayments represent a vast amount of incorrect payments that are revealed through the RAC process. After you submit a requested document to comply with an audit, a recovery audit contractor must report their findings within 60 days of receiving that information, Then, if they have identified an overpayment, you will receive a letter requesting reimbursement.

These are the steps you can take in conjunction with the RAC appeals process, and both timelines and deadlines are extremely important. After receiving an overpayment letter, you will have 15 days to contact the RAC to discuss the matter. You should also submit any additional evidence or records you have that would affect their final determination. This should be followed by a formal appeal, which has five levels:

  1. Initially, claims overpayments or denials must be appealed to the related Medicare administrative carrier within 120 days following the RAC’s original decision.
  2. If you are dissatisfied with the results of your Level 1 appeal, you have 180 days to make a request for reconsideration of your case.
  3. If the Level 2 decision is unsatisfactory, the next step is to request a hearing with an administrative law judge. Be sure to file this request within 60 days, and the amount in dispute must be at least $120.00.
  4. If you consider the administrative law judge’s decision to be unfavorable, you have the right to file an appeal with the Departmental Appeals Board within 60 days.
  5. The last step in the appeal process, a federal court review, should be filed within 60 days, and the amount involved must be at least $1,130.00.
What you should know
Statistics reveal that providers are only successful in about 35 percent of their appeals. This means that you must be prepared to cope with a negative determination, but that should not deter you if you feel that you have a solid case. Remember that everything should be done in a timely manner.

An underpayment may be due when a claim from a provider covers a simple procedure but the data show that more complex treatment was actually given. When this occurs, the RAC will submit a list of such underpayments to the MAC. At that point, the MAC researches the underpayment in question, determines if it is valid, and submits the related payment to the provider.


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