WASHINGTON –– A controversial program employing outside contractors to audit past Medicare payments to providers is set for expansion next year, with a nationwide rollout set for 2010.
The Centers for Medicare & Medicaid Services has deemed the initial demonstration project for the Recovery Audit Contractor program a success. The project, which identified more than $300 million in overpayments in three states, will be rolled out to three additional states in March.
RACs will affect all providers because they have been given wide latitude to identify Medicare overpayments and underpayments. The organizations are using sophisticated data mining applications to sort through Medicare claims information.
Even though the national rollout won’t occur for about three years, the RAC program is important now because contractors can go back through four years of claims data to look for potential errors in payment, said Dan Walter, senior principal in the healthcare division of Noblis, a Falls Church, Va.-based not-for-profit science, technology and strategy organization. So RACs in 2010 will be reviewing claims from 2007 to 2009.
Medicare tasks fiscal intermediaries and carriers to look for claims irregularities in the past year. The RAC program is unique, because the payment to contractors is based on a percentage of the overpayments they identify.
RACs can request medical records to investigate any provider’s claim. They’ve primarily looked for documentation to support the medical necessity of services from providers, Walter said. Other areas attracting RAC attention include improper coding and secondary payer issues.
The RACs in the demonstration project have focused attention on the hospital sector, said Jane Snecinski, a principal in Noblis’ healthcare division.
“They really didn’t find a lot in the physician area,” she said of the first two years of the demonstration project, which involved California, Florida and New York.
RACs for California have been aggressive, particularly in reviewing claims from rehabilitation providers, Walter said. Some providers are having nearly all claims challenged and are spending a lot of time answering those challenges.
Providers must respond to claims challenges by giving RACs relevant medical records for a case within 45 days. The RAC then has 60 days to report back to the provider whether an underpayment or overpayment has been identified. Providers can appeal RAC findings through usual Medicare appeals processes.
Providers should review medical record strategies to ensure that records include documentation of medical necessity, Walter said.