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RACs: Self Assessment and Aggressive Appeals Are Key

Edward Gaines, for HealthLeaders Media, June 1, 2009

Reimbursement investigations will likely be pursued in numbers and with a tenacity not previously seen in the Part B Medicare program. Hospital-based physicians should therefore take steps today to ensure that their practices will be ready if and when a RAC investigation is launched.

As an exclusive HealthLeaders Media audio feature demonstrates, RAC investigative results will be subject to the existing Medicare appeals process. Therefore, it is important that organizations be ready and willing to pursue timely appeals through the five-stage Medicare process in the event an investigation finds for recovery against the physician group.

According to CMS data, only 14% of providers in the RAC demonstration project appealed adverse RAC findings. However, of the groups that did appeal, 33% received rulings in their favor. Significantly, a provider win at any level in the appeal process reduces the RAC contractor contingency payment to zero. A win also prevents the RAC from coming back at a later date to scrutinize the same set of claims. An aggressive appeals stance on the part of providers, therefore, will likely emerge as a significant deterrent against marginal investigations as the program matures. However, knowing the appeals process is only the first step to effectively and successfully tackling a RAC investigation.

Self-assessment is a key step
It is important to have a program in place that can review a physician group's claims for a specific period of time to identify potential outlier situations in much the same fashion that RAC contractors assess claims. From this information, physician groups can then determine the nature and extent of potential problems and begin working to mitigate them before a RAC investigation is launched.

According to CMS, groups can take other steps to prepare for the RAC rollout:

  • Identify where improper payments have been persistent by reviewing the RAC’s Web sites.
  • Keep track of denied claims and corrections of previous errors.
  • Determine what corrective actions need to be taken to ensure compliance and avoid submitting incorrect claims in the future.

CMS plans to work closely with national and state medical, hospital, and nursing home associations to strengthen relationships and to anticipate the needs and concerns of healthcare providers. Before the program roll-out, town hall-type meetings will be held in each state and will include representatives from the regional RAC contractor, CMS, and provider organizations. Physicians can obtain information about these meetings and the date the program will begin in their states by checking the CMS RAC Web site.

RAC response strategies
Providers should prepare themselves by putting strategic processes in place should a RAC investigation be launched. In a RAC investigation, RAC medical record requests are in writing and providers have 45 days to respond. Providers should first know that a failure to respond leads to a determination of overpayment. Once a response is submitted, the RAC must notify the provider of the result within 60 days of their response. RAC demand letters must also explain reasons overpayment was ruled and appeal rights available to providers.

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