CMS Updates RAC Audit Timeline: Complex Reviews Still Months Away

HealthLeaders Media Staff, May 29, 2009

CMS anticipates Recovery Audit Contractor (RAC) automated reviews will begin in late June and July, according to Marie Casey, deputy director of the Division of Recovery Audit Operations at CMS. However, this is not set in stone, she says, noting, "there is some leeway."

But complex reviews won't begin until later, says Casey. CMS is aiming to begin certain types of complex reviews (e.g., coding and DRG validation) this fall. However, medical necessity complex reviews won't begin until early 2010.

The nature of automated reviews is simpler on the whole, she says, making them an easier choice to roll out first. "The automated reviews are less burdensome on the provider, because there's no request for medical records," says Casey, adding that automated reviews are also easier on the RACs themselves to manage.

The further delay of medical necessity auditing is due to the sheer complexity of the reviews. "We're delaying because it's more difficult. We are really trying to ensure that when there is a difference of opinion [on the medical necessity determination of the case], the RAC clearly documents their rationale," says Casey.

Casey says the delay will also help CMS with the rollout of its "issue review team," a group comprised of members of various agency divisions that will look at questions that come in about policy (e.g., whether the RACs are correct in interpretation of coding guidelines).

The issue review teams will be looking comprehensively at the questions, with staff with varying expertise on the review team, before approving new issues for RAC review, according to CMS representative Kathleen Wallace, who spoke during a May 28 Region D RAC training session held in Helena, MT.

What it all means

This is good news for providers and RACs. "Not only can providers avoid medical record requests for a few months, but this will allow providers and RACs to get used to the process before moving on to complex reviews that are more complicated and concerning," says Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc.

Because complex reviews are on hold until the fall, so too are medical record requests. When they do begin to arrive, they will likely be sporadic at first--at least in Region D.

HealthDataInsights, Inc., President and CEO Andrea Denko confirmed during the Helena training session that requests will initially be sporadic but should eventually fall into a pattern. "This cycle of receiving record requests will be helpful to providers," says Hoy. "People will be able to anticipate when they'll be getting record requests and be able to plan accordingly."

The American Hospital Association elaborated on CMS' decision to wait until 2010 to begin the medical necessity reviews in the May 28 issue of AHA News Now. Thirty-two percent of all demonstration program claims denials were for medical necessity, but a CMS study found a 40% error rate for medical necessity denials of inpatient rehabilitation facility claims performed by one of the RACs in the demonstration program, according to the article.

"This study validated concerns about the ability of RAC auditors to accurately judge the clinical decisions made by a patient's treating physician--sometimes three or more years after the care was provided," according to Rochelle Archuleta, the AHA's senior associate director for policy.

There is some truth to this, says Casey. "The medical necessity reviews are typically more difficult and include use of clinical judgment that's not defined in policy."

Benko indicated that HealthDataInsights has a system to direct cases to staff members familiar with particular types of care or facilities to help mitigate the potential for errors. HealthDataInsights Corporate Medical Director Ellen Evans, MD, highlighted their clinical review staff's wide variety of experience. For example, the RAC would direct a cardiac case to a nurse with cardiac experience for review or a rehab case to someone with rehab experience for review.

Other RAC news

In discussions with AHA this week, CMS clarified the time providers have to use the RAC discussion period, according to a May 28 AHA RAC Program Update. Providers will "have the option to use the RAC discussion period from the date of the RAC Review Results Letter through the date of recoupment of an overpayment--41 days following the date of the demand letter--rather than only through the issuance of the demand letter," according to the AHA.

In addition, CMS issued a sample demand letter to the RACs, which the AHA shared with the hospital community. This will be only the first sample letter in a series from CMS, says Hoy. Wallace and Denko indicated during the Region D training session that CMS will be developing multiple uniform letters addressing various situations for providers. "This should help providers understand exactly what is going on when they receive RAC-generated demand letters," says Hoy.

Finally, AHA confirmed in the RAC Program Update that the Government Accountability Office hopes to complete an analysis in November 2009 of the RAC demonstration program and the permanent program implementation.

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