Lobbying Affiliate: MML&K Government Solutions

Physicians Get Ready: CMS Releases the RAC Bounty Hunters, M.D. News, Vol. 2, No 8, 2009

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M.D. News, August 2009, Vol. 2, No. 8
By Lisa English Hinkle

The Centers for Medicare & Medicaid Services (CMS) has recently released four recovery audit contractors (RAC) to implement one of the most expansive audit programs ever devised to recover improper Medicare payments from physicians and other providers. Recognizing the success of its demonstration project where it spent just $0.20 to recover $1, CMS has contracted with four bounty hunters who will be paid on a contingency fee basis based upon how much they recover from providers. Kentucky's RAC, CGI Technologies and Solutions and its subcontractor, PRG Shultz, have negotiated the highest payment rate (12.5 percent) of all the RACs. Kentucky physicians can expect to start hearing from its RAC during the next several months as the first rounds of audit and demand notices are sent.

RAC Tools

RACs are authorized to use two strong tools to identify improper payments. Armed with software programs and the authority to demand medical records, RACs conduct two types of review: automated, where audits are undertaken without review of medical records, and complex, where the RAC reviews medical records. In an automated review, an RAC makes claim determinations using its software programs to identify errors. To make a denial based upon an automated review, there must be "certainty" that the service is not covered or incorrectly coded with supporting Medicare policies unless the claims are clinically unbelievable. For example, an automated review could identify when a provider bills for more unites than allowed in a day. When automated review identifies an error, the RAC issues an explanation, but also issues a demand for repayment that triggers the collection process.

Complex reviews occur when an RAC makes claim determinations that require human review of medical records. Complex reviews must be based upon issues that are well established as improper but require medical record review to determine whether error occurred. An RAC must complete a complex review within 60 days of receipt of the medical records. When a complex review is undertaken, an RAC must supply information about the credentials of the individuals making the review determination and make its medical director available to discuss a claim denial at a provider's request. Complex reviews will include review of medical necessity, appropriate coding, etc.

CMS anticipates RAC automated reviews to start in summer 2009 and complex review to begin in 2010. For Kentucky physicians, this means that demand letters may be right around the corner.

What To Expect

When an RAC or its subcontractor identifies overpayments using its automated systems, provider receives an explanation of audit review with a demand for repayment letter notifying the provider that if repayment is not received, recoupment will be initiated. This demand letter triggers a provider's rights to appeal. Recoupment (offset from future payments) will start unless a provider appeals or repays. Confusingly, a provider has the right to discuss the audit results with the RAC. This discussion period, however, does not stop the deadlines for appeal of the overpayment determination. Collection will begin if an appeal has not been taken within 30 days of the demand for repayment.

Complex reviews commence when an RAC demands medical records. Physicians have 45 days to provide the records, but may request an extension. Limits do exist on the number of medical records that an RAC may request based upon the number of providers in a practice. For a sole practitioner, an RAC may only request 10 medical records per 45 days; for a group with 16 or more physicians, an RAC may request 50 medical records per 45 days.

Following all complex reviews, an RAC must issue an audit results letter and permit a 45-day discussion period to consider provider issues. Like the automated review, when a demand letter is issued, the collection process is triggered unless appealed or repaid.

What To Do

As RAC reviews commence, physicians can expect to receive repayment demands based upon automated reviews as well as demands for patient records. Based upon experience with the demonstration project, effectively engaging in the review process and appealing RAC determinations can be successful even though the process is extremely confusing. Dealing with a bounty hunter requires:

Lisa English Hinkle is a partner in McBrayer, McGinnis, Leslie & Kirkland, PLLC. Her practice area is health care law. She can be reached at 859-231-8780 or lhinkle@mmlk.com.

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