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How Revised RAC Statement of Work Will Impact Providers

James Carroll, for HealthLeaders Media, September 23, 2011

The Centers for Medicare & Medicaid Services released a revised recovery audit contractor statement of work September 12 that contains several revisions and clarifications as well as new additions that will affect providers in a number of ways.

Among the areas of potential interest for providers, the newly released guidance addresses the RACs' treatment of the discussion period, according to Michael Taylor, MD, vice president of clinical operations at Executive Health Resources in Newtown Square, PA.

"When the discussion period first rolled out, CMS and the RAC contractors were heavily promoting it. It could be done in a verbal format, but now, it is clear that discussion period has to be in a written format. If the provider is pursuing discussion, and an appeal is filed during that time period, the RAC is charged—at that point—with ending the discussion period," said Taylor.

He continued, "So providers are going to have to make the choice of going right into the appeals process or using the discussion period first, because providers could find it fruitless to do this at the same time because of the new policy."

With this new change, providers will have to take more of a targeted approach. If a provider seeks to appeal early in the process to prevent recoupment, managing timelines becomes crucial. Depending on the timeliness of correspondence with the RACs, providers may opt not to use the discussion period because it may slow their process down and it could put their ability to file that first level appeal in time to prevent recoupment in jeopardy, according to Taylor.

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1 comments on "How Revised RAC Statement of Work Will Impact Providers"


Terry Myers (9/23/2011 at 11:30 AM)
The example provided for the partial denial using an inpatient admission down graded vs. denied to observation is very misleading. The RAC auditor can not downgrade/allow a partial payment in this situation. If this is an inpatient admission with an inpatient admission order the RAC auditor can not create an observation (refer to observation) order only a physician (primarily responsible for the care of the patient with proper privileges at the hospital) can create an order. The RAC has no choice in this situation but to deny the inpatient admission. The hospital can try to go back and bill for services provided, lab, X-ray and others (no observation) IF they have valid physician orders for the services that include the medical justification. The job of the RAC is not to bill for the hospital. The above example is driven by three primary issues: 1) Physician education on inpatient vs. refer to observation requirements is important. 2) Lack of case management and other physician support assessing a patient upon admission that provides assistance to physicians in [INVALID]ing the appropriate service. 3) CMS has clarified that an admit order without any further clarification as to inpatient or refer to observation is an inpatient admission. Good forms design along with a process to assure a proper admission order is also required. A valid example would be a partial denial caused by a coding change that takes away a CC or MCC. In this case the hospital will see the removal from the MAC of the total payment for the original DRG than a payment for the new (lower) DRG. This example also requires that a valid physician inpatient admission order exists. A normal validation item for the RAC audit.