RACs Are on Hold

CMS seeks new contractors; looks to clear appeals, improve program

CMS’s agreements with recovery audit contractors (RACs) to administer the recovery audit program are winding down. As of March 1, the current RACs may no longer send additional documentation requests (ADRs) to providers. Recovery auditors may conduct automated reviews through June 1, and may complete reviews for the ADRs sent as of Feb. 28.

CMS has yet to issue a request for new contracts, but has extended the current contracts (originally, set to expire last month) until the end of 2015. The extension is meant to allow contractors to process a huge backlog of outstanding appeals. CMS previously suspended appeals to administrative law judges of decisions from RACs for two years, so as to clear over 350,000 outstanding claims.

CMS has stated that the pause will allow it “to continue to refine and improve the Medicare Recovery Audit Program.” For instance, the agency “is reviewing the Additional Documentation Request (ADR) limits, timeframes for review and communications between Recovery Auditors and providers. CMS has proven it is committed to constantly improving the program and listening to feedback from providers and other stakeholders.”

CMS has already announced changes to the RAC program, including:

• Recovery Auditors must wait 30 days to allow for a discussion before sending the claim to the MAC for adjustment. Providers will not have to choose between initiating a discussion and an appeal.
• Recovery Auditors must confirm receipt of a discussion request within three days.
• Recovery Auditors must wait until the second level of appeal is exhausted before they receive their contingency fee.
• CMS is establishing revised ADR limits that will be diversified across different claim types (e.g., inpatient, outpatient).
• CMS will require Recovery Auditors to adjust the ADR limits in accordance with a provider’s denial rate. Providers with low denial rates will have lower ADR limits while provider with high denial rates will have higher ADR limits.

In the meantime—and even though ADRs will cease for the near future—providers can’t totally relax. The RACs (currently) have a three-year look-back period: Any future contractors may look back to claims filed during the current lull. Just because the RACs aren’t active now, doesn’t mean you won’t someday be audited for services provided during this time.

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John Verhovshek

John Verhovshek, MA, CPC, is a contributing editor at AAPC. He has been covering medical coding and billing, healthcare policy, and the business of medicine since 1999. He is an alumnus of York College of Pennsylvania and Clemson University.

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