RAC Audit In-Service

RAC Audit In-service
By: Andrea K Burke, HIM Supervisor
Introduction
What is the RAC Program?
RAC stands for Recovery Audit Contractor
Program. It was developed by Congress to pay
increased attention to outpatient and inpatient
status determinations for hospitalized Medicare
beneficiaries.
This contractors have been able to return
approximately 5.4 billion to the Medicare Trust
Funds in improper payments.
What are Improper Payments?
Improper payments results from incorrect
application of coding rules, payment for noncovered services, underpayments and
overpayments.
RAC Program Mission

Their mission is to detect and amend improper payments
through finding and gathering overpayments made on health
care claims for services provided to Medicare recipients. They
also work to identify underpayments to providers and assist
the CMS in implementing actions that will prevent future
improper payments.
Audits
There are two main types; automated reviews and complex
reviews.
Automated review - The contractor uses data search
techniques to identify Medicare claims with errors and make
overpayment and underpayment determinations without
evaluating the medical records associated with the claims.
Complex review - RAC contractor makes overpayment and
underpayment determinations after evaluating the medical
records associated with the claims.
Who is Eligible to be Audited?

The Recovery Audit Contractors are authorized to investigate claims submitted to Medicare by
medical suppliers, facilities, physicians and providers. Basically, any entity that provides
procedures, treatments, services and submits fee-for-service claims to Medicare and or their
intermediaries for the benefit of Medicare recipients.
Jurisdictions
The United States is divided into four jurisdictions or regions for the RAC program. The regions
are labeled A thru D, each making up a quarter of the country and each region is awarded a
contract.
Diversified Collection Services audits region A
CGI Group works with region B
Connolly, Inc has region C
HealthDataInsights is responsible for region D
PRG Schultz, iHealth Technologies, Strategic Health Solutions, and Viant are considered
subcontractors for various regions that need assistance.
Are We Prepared for an

Audit?
Trigger Points for Audit that may result in denied claims

Under what circumstances can a RAC make an
overpayment/underpayment decision without a medical record?
RAC may use an automated review where no medical record is
involved in the review only in situations where there is certainty that
the claim contains an overpayment.
The decision would be based on a medically unbelievable service
or occur when no timely response is received in response to a
medical record request.
RAC Validation Process

When RAC selects a potential issue, they send a sample of the claims to be validated prior to
moving forward. This process ensures that there is a potential for an overpayment.
After the issue is identified, it is sent to the CMS central office for review and to a secondary
auditor for a second opinion if needed.
A random sample of the RAC reviewed claims are sent to the CMS and/or RAC Validation
contractor each month with an accuracy rate calculated.
Overpayment Intervention
Overpayment claims are related to a recurring pattern
such as improper coding, it is imperative that the
errors are addressed and an intervention put in place.
Possible solutions may include
Providing education for medical staff to improve
documentation
Review policies to ensure they reflect the practice you
work for
Increase training for coding staff
Establish performance measures to improve coding
accuracy and efficiency
Access staff compliance with organization coding
guidelines
Track the effectiveness of the intervention and
analyze future impact on claims.
Underpayment Examples
Missed charges when charges were already
present. If no charges were billed, lost charges
are not subject to underpayment
determinations
Transfer disposition on patient file but the
patient did not return to skilled nursing facility
for remainder of days
DRG was recoded to a higher DRG
RACs are compensated for underpayments.
At Risk Areas
Charge Master
CPT codes mismatched with Revenue Codes
59 modifier being applied when CPT codes reject without
the medical record or knowledge of the CCI edit failures
Reimbursement rules not know with charge capture
J codes with incorrect multipliers
1 Day Stay High Alert

MSDRG 371: Major gastrointestinal disorders with (MCC)
major complications and comorbidities
MSDRG 313: Chest Pain
MSDRG 373: Major gastrointestinal disorders without cc/mcc
MSDRG 829: Other endocrine, nutritional, metabolic or
procedure with cc
MSDRG 551/552: Medical back pain
This is just a sample. A listing will be provided to each of
you on what exactly to look for with your individual files.
What to do if we receive a RAC letter

1) Review the results of the initial validation review.
2) Involve the physician if necessary to assist in developing an appeal
strategy
3) If there is no appeal that is appropriate, flag the account for
recoupment and monitor
4) Prepare a letter to send to the patient; watch for Medigap
recoupment and/or refunds
5) Determine rebilling potential for lesser services
6) Determine the value of using the informal 15-41 day rebuttal
7) See the next slide for the appeal timeline
RAC Medicare Appeals Five Levels
Level One Redetermination

A. Time Limit is 120 days from the date RAC payment was adjusted
B. Carried out by Medicare Administrative Contractor (MAC)
Level Two Reconsideration

A. Time Limit is 180 days from redetermination decision
B. Carried out by a (QIC) qualified independent contractor
Level Three Administrative Law Judge

A. Time Limit is 60 days from the reconsideration decision
B. Carried out by (ALJ) Administrative Law Judge hearing
Level Four Medicare Appeals Council

A. Time Limit is 60 days from ALJ decision
B. Carried by (MAC) Medicare Appeals Council
Level Five Federal Court Review
A. Time Limit is 60 days from MAC decision
B. Carried out by the federal district court
Understanding the Accumulation of Interest

If an appeal is filed within 30 days, the MAC will not take back the funds. (Take back is
immediate and occurs within 41 days of notice if no appeals are filed).
While the facility is going through the Medicare appeal levels, interest will accrue on the
amount that is being disputed.
If the overpayment dispute is overturned at any of the appeal levels, the interest will be
removed.
If the overpayment dispute is not overturned, then the interest is left on the account.
The overpayment take back will include the interest.
CAUTION: The incentive is to only appeal determinations where there is a good chance or
belief that they will be overturned. There is punishment for appealing all files because of
interest.
Average interest rate is 11%
Patient Impact
If the inpatient file is denied, the patient and Medigap
supplements will be informed that they dont owe the
inpatient deductible. If paid, a refund to the patient
and/or supplement will receive and auto recoupment.
If the facility determines that they would like to file a
corrected claim submission once a decision is made not
to appeal, the patient will receive notice that they owe
a new outpatient deductible and coinsurance.
If the outpatient claim is denied payment, the patient
will be informed that they dont owe the outpatient
portion.
PREPARE: Prior to speaking to the patient, have a
script ready for the staff to follow as the explanation
for the changes.
REMEMBER: All activities and recoupments can go
back three years.
You have completed learning information regarding RAC, the appeal process and
what to look for in your files. You will receive more information from your
supervisors for your particular area of coding files and how to make our
department more efficient and appeal free.

RAC Audit In-Service

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RAC Audit In-Service

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RAC Audit In-service

By: Andrea K Burke, HIM Supervisor

RAC Program Mission

Who is Eligible to be Audited?

Are We Prepared for an

Trigger Points for Audit that may result in denied claims

RAC Validation Process

RACs are compensated for underpayments.

1 Day Stay High Alert

What to do if we receive a RAC letter

RAC Medicare Appeals Five Levels

Level One Redetermination

Level Two Reconsideration

Level Three Administrative Law Judge

Level Four Medicare Appeals Council

Level Five Federal Court Review

A. Time Limit is 60 days from MAC decision

B. Carried out by the federal district court

Understanding the Accumulation of Interest

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