RAC Provisions Putting CMS, Providers at Odds

James Carroll, February 10, 2010

In response to feedback from the RACs, providers, suppliers, and their associations, CMS recently expanded its fiscal year 2010 RAC additional documentation requests (ADR) limits to all institutional providers.

According to CMS, each RAC will set an annual limit on the maximum number of medical records that can be requested per 45-day period, per hospital campus. A campus unit is defined as a group of facilities or practices grouped under one single organization. For each campus, the limit is on that unit's prior fiscal year Medicare claims volume.

The previous system for establishing ADR limits was based on National Provider Identifiers (NPI), a 10-digit number adopted in 2004 as the HIPAA standard identifier. Covered healthcare providers, health plans, and healthcare clearinghouses used NPIs in administrative and financial transactions.

The problem with NPIs was that a provider may have multiple NPIs and be subject to maximum medical records on each, according to Elizabeth Lamkin, an associate at Axcel Healthcare Group in Tampa, FL. CMS addressed the issue after many providers expressed concern in CMS forums, she notes.

New ADR limits are based on the provider or supplier's Tax Identification Number (TIN) and the first three positions of the facility's ZIP code. These TINs will reduce the number of limits that would have been imposed for each facility by using NPIs as the standard identifier. The limits will be set at 1% of claims submitted for the previous calendar year, and divided into eight 45-day periods. CMS clarified that limits will be applied for all claim types, including professional services.

While RACs can go more than the 45-day period between record requests, they cannot make requests more than every 45 days. According to Lamkin, each hospital should have a RAC committee working with finance to apply the formulas provided by CMS on TINS and zip codes.

She provides an example:

If a hospital has an ambulatory surgery center under the same TIN in a ZIP code within the first three positions of the hospital, the cap will apply to combined facilities. In other words, 200 per 45 days for all facilities as opposed to 200 per hospital and ASC for a total for 400 per 45 days. But key to this is a system of getting it right concurrently. By ensuring appropriate utilization management, documentation, and billing, a hospital risk for failing automated reviews is dramatically reduced. CMS will have to approve ADRs and a facility with a high automated review failure rate will be vulnerable.

With a consideration to the number of medical request limits that could be coming into campuses nationwide, two caps have been set for 2010. Through March 2010, the cap for ADRs will remain at 200 per 45 days for all providers. From April to September, however, providers who bill in excess of 100,000 claims to Medicare will have a cap of 300 ADRs per campus, per 45 days. In addition, CMS will allow RACs to request permission to exceed the set cap after six months of the fiscal year. At this time, RACs must request approval from CMS on a case-by-case basis and affected providers would be notified prior to receiving additional requests.

This new system may seem to solve some problems on paper, but may prove to have similar concerns from providers, Lamkin says.

"CMS is trying to make the process fairer by listening to the concerns of the providers," she says. "However, the question of fairness should be applied to the entire RAC endeavor. The third-party RAC system puts CMS and providers at odds with each other, when in reality they need to be partners to provide the highest quality healthcare."

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