RAC Ready

RAC Ready blog has moved to MHA Connect

MHA's RAC Ready blog has moved to MHA Connect. The online community setting allows our hospital members and their employees to share documents, post discussion items and read and share news and upcoming educational events. If you work for an MHA member hospital and need your username and password to log in, contact Diane Clift at (601) 368-3217 or dclift@mhanet.org. This same username and password will also work to register for meetings at www.mhanet.org and access members-only information on MHA's new smartphone app. Once you log in, you will still be able to choose how you would like your news delivered to you, so daily updates are still an option.

If you are not an MHA member, you will still be able to read the public news here. Community members will be able to use the discussion board to see if others are having similar RAC issues and share and view documents uploaded to the community. (These items are not viewable unless logged in.)

If you have any questions or suggestions, email Shawn Rossi at srossi@mhanet.org.

Demand letter confusion

A compliance director at a hospital in Region C (who wished to remain anonymous) shared one of her latest recovery auditor stories with the Revenue Cycle Institute. She informed them that her facility has been receiving demand letters from Connolly before receiving the results letters for some complex reviews. Connolly is also sending demand letters that contain both automated and complex reviews, and do not contain the account patient control number, making it more laborious to try to identify the account and the issue.

“When this happens, they are essentially throwing in every possible issue that an account could be audited for and making you choose which one they have targeted and identified,” she says. “They are also taking money back on the date of the demand letter without giving the provider a chance to stop recoupment.”

Has something similar happened at your facility? Have you contacted/heard back from your particular recovery auditor? If you have tips, ideas, questions, comments, or concerns to share with your peers, then submit them to jcarroll@hcpro.com.

CMS revises RAC demand letters

In response to suggestions by the American Hospital Association and state and regional hospital associations, the Centers for Medicare & Medicare Services has revised the letter used to demand the return of alleged overpayments from health care providers under the Medicare Recovery Audit Contractor program. Beginning in January, Medicare administrative contractors will assume responsibility for sending the letters under a CMS policy change announced earlier this year to address timeliness concerns raised by hospitals.

A sample of the new letter, with the changes highlighted, can be found at www.aha.org. According to CMS, the "R" before the letter number is intended to help providers identify the letter as a RAC-initiated claim and redirect it to the appropriate staff.

AHA had urged CMS to require MACs to send the letters to a RAC contact address provided by the hospital, but CMS indicated it was unable to accommodate such an address in its computer system. Thus, hospital departments that receive MAC correspondence must distribute the RAC demand letters to the appropriate staff.

They also should speak with their MAC about ways to improve the process, and learn whether their RAC's provider portal indicates when a demand letter has been sent. Questions about the new letter and policy should be directed to the CMS RAC Project Officers.

Medicare Enrollment: Will This Become a RAC Issue?

Enrollment in the Medicare program progressively has become more involved over the years. This process is accomplished through the use of various CMS-855 forms. On July 1, 2011 CMS quietly updated the CMS-855 system and switched from five different forms to six by adding the CMS-855-O.

Read more here.

AHA Regulatory Advisory: Part A to Part B Rebilling Demonstration Project

The Centers for Medicare & Medicaid Services (CMS) on November 15 announced a new Part A to Part B Rebilling Demonstration Project, and the agency will begin accepting hospital applications today at 2 p.m. Eastern Time at the email addresses listed on page two the attached advisory. The project allows hospital participants to rebill certain inpatient denials as outpatient hospital claims for partial payment. Only 380 hospitals will be selected on a first-come, first-served basis to participate in the demonstration. Hospitals will be chosen based on bed size and location by region.

In order to participate in the demonstration project, hospitals must waive their appeal rights for all short stay claims that are denied because a CMS auditor determined the care should not have been provided in the inpatient setting.

The American Hospital Association has published a Regulatory Advisory reviewing the application process. If you are an MHA member and would like a copy, please email Shawn Rossi at srossi@mhanet.org. Please share this information with hospital leadership and RAC and clinical staff to determine whether your hospital should apply to participate in the rebilling demonstration project.

Three Biggest Ways Medicaid RACs Will Affect Hospitals in 2012

While it seems as though the Medicaid Recovery Audit Contractor program has been discussed for ages, it will finally go into effect starting Jan. 1, 2012. The Medicaid RAC program is based off the Medicare version and is expected to save taxpayers $2.1 billion over the next five years, according to estimates from the Department of Health and Human Services.

Hospitals currently deal with Medicare RACs, which collected $797.4 million in overpayments from providers in fiscal year 2011, but a Medicare RAC and a Medicaid RAC are two different animals. Medicaid RACs will also affect a whole new population of hospitals — notably children's hospitals and hospitals that don't treat a high volume of Medicare patients. Here are three things hospitals need to be aware of as Medicaid RACs gear up for their first calendar year.

CMS issues RAC report; AHA survey details RAC impact on hospitals

Recovery audit contractors have recouped $797.4 million in alleged Medicare overpayments to health care providers and paid providers $141.9 million in underpayments since October 2010, according to a new report from the Centers for Medicare & Medicaid Services. CMS claims Medicare RACs collected $354 million in overpayments in the third quarter of fiscal year 2011 alone.

However, hospitals participating in the American Hospital Association's latest RACTrac survey report appealing about one in three claim denials, of which 77% were overturned on appeal. The CMS report does not reflect these overturned denials.

According to CMS, coding errors and a lack of sufficient documentation to support medical necessity were among the top overpayment issues cited in the four RAC regions. For more on the AHA survey, which provides additional information on medical necessity denials and the RAC program’s administrative burden, hospitals are invited to attend a Jan. 4 webinar. To register, click here.

Recovery Auditors Correct $353.7 Million in Final Quarter

As has become their custom, CMS has released the data on Medicare RAC collections for the last quarter, along with a supplemental report for the entirety of fiscal year (FY) 2011.

For the final quarter, the recovery auditors identified $353.7 million in claims' corrections, with $277.1 million in overpayments collected and $76.6 million in underpayments returned to providers. This represents a cumulative increase of 22 percent over all corrections identified in the third quarter.

OIG Semiannual Report Notes Potential Overpayments for Outpatient Services

Provider errors, unallowable services and insufficient documentation caused Medicare to overpay for outpatient services, according to the Office of Inspector General’s Semiannual Report for April through September.

OIG recommended that contractors implement “system edits to identify line item payments that exceed billed charges” and to use audit results it notes in the report. The reports include six jurisdictions.

Read more here.

More hospitals are appealing RAC denials; medical necessity a focus

Hospitals are appealing nearly a third of all Medicare Recovery Audit Contractor denials, 77% of which have been overturned in favor of the provider according to more than 2,000 hospitals responding to the AHA's latest RACTrac survey. The survey also reveals that medical necessity denials are the top reason RACs have denied claims since first-quarter 2010, and that the majority of these medical necessity denials were for one-day stays found to be in the wrong setting, not because the care was medically unnecessary.

The latest RACTrac report, which contains new data from enhancements the American Hospital Association recently made to the survey, reveals that 57% of hospitals report that they have yet to receive any education related to avoiding payment errors from the Centers for Medicare & Medicaid Services or its contractors. Hospital representatives are invited to attend a free Jan. 4 webinar to hear an update on the RAC program and review the survey results.

Hospitals also will learn how to participate in the free web-based survey, which helps hospitals monitor the impact of RACs and advocate for needed changes to the program. For more information, visit www.aha.org/aha/issues/RAC/ractrac.html.

RAC Pilot Program to Focus on Prepayment Reviews

Recovery auditors will examine claims before they are paid as part of a new demonstration starting Jan. 1. The prepayment audits, which CMS announced Nov. 15, will conduct those audits on “certain types of claims that historically result in high rates of improper payments,” CMS noted.

Learn more here.

Connolly adds three new issues across two categories

Connolly Healthcare added three new issues across two categories—two for medical necessity claims and one for DRG validation claims—to its CMS-approved list for providers in all Region C states. Learn more here.

OIG Cites Oversight Performance Issues with ZPICs

Workload data used by the Centers for Medicare & Medicaid Services (CMS) to oversee its Zone Program Integrity Contractors (ZPICs) is not uniform and at times inaccurate, factors creating data access issues affecting the contractors’ ability to perform oversight activities, according to a report released this month by the U.S. Department of Health and Human Services (HHS) Office of Inspector General.

Read more here.

CMS announces major efforts to help reduce Medicare, Medicaid improper payments

As part of the ongoing effort to reduce improper payments in Medicare and Medicaid, CMS announced on November 15 that it will launch a number of demonstration programs beginning in January 2012 that will target some of the most common factors that lead to erroneous payments. The top two issues that have the most dramatic impact on providers are the launch of a recovery audit prepayment review program and a Part B rebilling initiative.

Learn more here.

More RAC Targets Reflect OIG Focus in 2012 Work Plan

Another issue posted by a recovery auditor closely resembles targets the Office of Inspector General will focus on in 2012. Connolly, the Region C RAC, will review whether services provided to patients at inpatient rehabilitation facilities (IRF) are medically necessary, according to an issue approved Nov. 9.

Learn more here.

RAC Issue Follows OIG Report, Targets Power Wheelchairs

CGI Federal, the recovery auditor for RAC Region B, will review documentation for medical necessity and coding requirements for claims with new power wheelchairs, according to an issue approved Oct. 26. Read more here.

RACs: Are They Really Reaching Out?

Since the beginning of the permanent Recovery Audit Contractor program, the four RAC contractors have been mandated to perform provider outreach to “notify provider communities of the recovery auditor’s purpose and direction,” according to the RAC Statement of Work (SOW), which was updated in September. Read more here.

Medical Necessity Dominates New RAC Issues

The two recovery auditors that posted issues last week listed a slew of medical necessity reviews. DCS Healthcare Services, the Region A RAC, posted four issues for Part A providers in Maryland about surgical cardiovascular procedures, renal and urinary tract disorders, infections and musculoskeletal disorders.

Read more here.

RAC Issue Mirrors OIG Target

An issue posted for complex review by the Region C recovery auditor (RAC) Connolly is similar to one in the Office of Inspector General (OIG) Work Plan for 2012. The issue relates to multi-dose vials of Herceptin (Trastuzumab), which contain 440mg of the drug. Outpatient hospitals should bill only the doses of the drug administered to the patient, not any drug waste, Connolly noted.

Learn more here.

Connolly adds six new issues across three categories

Connolly Healthcare added 33 new issues across nine categories—four for outpatient hospital – unspecified claims, one for DME non-physician – supplies claims, and one for ambulance claims—to its CMS-approved list for providers in Region C states. Learn more here.

MHA hosting webinar on the OIG and RAC initiatives for 2012

On Nov. 15, the Mississippi Hospital Association will host a webinar, The Office of Inspector General and RAC Initiatives for 2012, from 8:30 a.m. until 10 a.m.

This webinar addresses a review of the OIG Work Plan issues for hospitals, clinics, and other health care providers. FY2012 Work Plan issues are addressed in the context of OIG Work Plan issues from FY2007 through FY2010. The RAC issues are discussed relative to current and anticipated trends. Particular attention is given to identification of issues in the context of internal and external auditing to make certain that any OIG and RAC issues are adequately addressed by health care providers.

Register online here. For more information, contact Judith Forshee at (800) 289-8884, (601) 368-3216 or jforshee@mhanet.org.

RAC Focuses on Pain Management Providers at Various Audit Levels

As is the case with many RAC provider and hospital issues, the first stop on the national level for providing contractors with guidance on billing and coding is the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG). Not surprisingly, an August 2010 DEI report (05-09-0030) written by Inspector General Daniel Levinson was virtually an "open door" to scrutinize coding and documentation practices for pain management providers further.

Read more here.

OIG Will Continue Data Mining: Highlights of the 2012 Work Plan

It’s that time of year, when the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) releases its annual work plan. This document always offers a valuable look into the key compliance initiatives and projects for the year. Providers and others should review this 165-page document, as it reflects some increased activity in fraud and abuse identification.

Learn more here.

AHA Regulatory Advisory: Recovery Audit Contractor Final Rule

On September 14, the Centers for Medicare & Medicaid Services released a final regulation for the new Medicaid Recovery Audit Contractor (RAC) program. The final rule was published in the September 16 Federal Register.

States must contract with at least one Medicaid RAC by January 1, 2012, to identify provider overpayments and underpayments and recoup overpayments. States may apply for exemptions from the program, and, as urged by the American Hospital Association, states may exclude Medicaid managed care claims from RAC review.

Major provisions of the rule are described in a recent AHA Regulatory Advisory. If you are an MHA member and would like a copy of this advisory, please email Shawn Rossi at srossi@mhanet.org.

The advisory should be shared with your senior management team and hospital utilization review, coding and billing staff, as well as your clinical leadership team. Develop a plan to respond to RAC inquiries and take corrective actions to limit your RAC vulnerabilities.

Connolly posts two new issues for DME non-physician – supplies claims

Connolly Healthcare added two new issues for DME non-physician – supplies to its CMS-approved list for suppliers that bill CIGNA Government Services. Learn more here.

RACTrac survey deadline extended

The American Hospital Association has extended to Oct. 21 the deadline for hospitals to submit data to its quarterly RACTrac survey. The free web-based tool measures the impact on hospitals of Medicare's Recovery Audit Contractor program, educates the hospital field on RAC vulnerabilities and helps AHA advocate for needed changes to the program.

Registration information was e-mailed to hospital leaders last month, and is also available from RACTrac Support at (888) 722-8712 or ractracsupport@providercs.com. For more on the survey, visit www.aha.org/aha/issues/RAC/ractrac.html.

Connolly adds 33 new issues across nine categories

Since April 14, Connolly Healthcare added 33 new issues across nine categories—Seven for physician claims, one for physician (carrier) claims, two for inpatient hospital claims, one for carrier claims, six for outpatient hospital – unspecified claims, nine for inpatient hospital – acute care claims, one for other FI biller claims, one for outpatient hospital – ASC claims, and five for DME non-physician – supplies claims—to its CMS-approved list for providers in Region C states. Learn more here.

More Complex Reviews Expected from the RACs

As we study the RACs’ recent focus on automated reviews and the need to escalate recoupment, we predict that healthcare providers will experience an increase in activity when it comes to complex reviews related to medical necessity. Read more here.

CMS issues annual report to Congress on Medicare RAC program

 
Recovery audit contractors identified and corrected $75 million in Medicare overpayments and $16.9 million in underpayments in fiscal year 2010, according to the Centers for Medicare & Medicaid Services' first annual report to Congress on the national program. The national Medicare RAC program, rolled out after a three-year demonstration project, began collecting overpayments and refunding underpayments to Medicare providers in FY 2010. Mississippi is in Region C.

The report identifies overpayments and underpayments by state and RAC region, the most common coding errors by region, and actions being taken to prevent improper payments, although CMS acknowledges it needs to do more. The report also scores the four RACs for their overall accuracy, but does not explain how the scores were derived.

In addition, it provides an update on CMS efforts to expand recovery auditing to Medicaid and Medicare Parts C and D, as required by the Patient Protection and Affordable Care Act. Unlike the report, the American Hospital Association's quarterly RACTrac survey tracks the impact of RACs on hospitals. Hospital representatives can review the survey's latest findings online and attend an Oct. 5 webinar to learn more.

Revenue Cycle Institute releases Prinicipal Diagnosis Selection White Paper

The Revenue Cycle Institute has released a new white paper, “Principal Diagnosis Selection: Understand the factors to determine the appropriate codes,” by Jennifer Avery, CCS, CPC-H, CPC, CPC-I, Regulatory Specialist for HCPro, Inc. To download the white paper, click here.

Update: CMS releases Medicaid RACs final rule

In February, the Centers for Medicare and Medicaid Services (CMS) delayed its expected April 1 implementation of the Medicaid recovery audit contractors (RACs) final rule until an unspecified time later this year. That unspecified date became today: CMS released its Medicaid RACs final rule.

The rule will be published in the September 16 Federal Register and takes effect January 1, 2012.
The rule provides guidelines for state Medicaid agencies in establishing their respective recovery audit contractor (RAC) programs. While the American Hospital Association continues to have concerns about the Medicaid RAC program and duplicative audit programs, CMS has made several improvements to the rule. The rule allows states to apply for exemptions from the program if they have other audit programs in place. In addition, as urged by AHA, states may exclude Medicaid managed care claims from RAC review.

Although the proposed rule included significant flexibility for states, we had expressed concerns that many of the lessons learned in the Medicare RAC Demonstration and addressed in the Medicare RAC program were not taken into account. The AHA is pleased that the final rule takes important steps to more closely align the Medicaid RAC program with the Medicare RAC program by incorporating several provisions that minimize burden, protect providers and improve communication.

Under the final rule:

• States may exclude Medicaid managed care claims from review by Medicaid RACs.
• States must coordinate the recovery audit efforts of their Medicaid RACs with other auditing entities.
• States must set limits on the number and frequency of medical records to be reviewed by the Medicaid RACs subject to requests for exceptions made by the RACs.
• Each RAC must hire at least one physician Medical Director.
• RACs must hire certified coders unless the state determines that certified coders are not required for the effective review of Medicaid claims.
• RACs must work with the state to develop an education and outreach program.
• RACs must provide minimum customer service measures including:
  - Providing and appropriately staffing a toll-free customer service telephone number.
  - Compiling and maintaining provider approved addresses and points of contact.
  - Accepting provider submissions of electronic medical records on CD/DVD or via facsimile at the 
     providers' request.
  - Notifying providers of overpayment findings within 60 calendar days.
• RACs must not review claims that are older than three years from the date of the claim.
• RACs should not audit claims that have already been audited or that are currently being audited by another entity.
• Medicaid RACs must return their contingency payment if a provider appeal reverses a Medicaid RAC overpayment determination.
• States must adequately incentivize the detection of underpayments.
• States must provide appeal rights under state law or administrative procedures.

Watch for an AHA Regulatory Advisory with further details in the coming days.

The Medicare Overpayment Collection Process: CMS Issues Fact Sheet to Clarify Key Points

In July, the Centers for Medicare & Medicaid Services issued a fact sheet to explain everything physicians and suppliers need to know about the definition and the collection process related to overpayments. It also provides resources where they can learn more. Medicare physicians and suppliers who have not yet gone through this process may find the data within the document useful.

Read more here.

MICs and RACs: Knowing the Difference Can Make a Difference

On Feb. 8, 2006 the Deficit Reduction Act of 2005 was signed into law (P.L. 109-171), creating the Medicaid Integrity Program (MIP) under Section 1936 of the Social Security Act. This dramatically strengthened federal capability to fight Medicaid fraud, waste and abuse.

Read more here.

CMS updates agreement with Medicare RACs

The Centers for Medicare & Medicaid Services has updated its Statement of Work for the Recovery Audit Contractor program to address calls by policymakers to increase program collections. The new SOW increases CMS oversight of the RACs to ensure workloads are met; clarifies that the program should review all types of Medicare claims and providers; and requires RACs to review all health care providers referred by CMS and other government auditors. The statement also officially establishes semi-automated review, which allows RACs to obtain additional information from providers before making automated denials that may be inappropriate.

The statement addresses several concerns the American Hospital Association has raised with CMS by requiring better organization of RAC websites; more appropriate notification of the reasons for denials; and a guaranteed RAC discussion period for all claim denials, giving providers an opportunity to reverse denial decisions without entering the formal appeals process. In related news, CMS has published a Medicare Learning Network article on the new Electronic Submission of Medical Documentation (esMD) pilot, which gives some providers a new mechanism for submitting medical documentation to RACs.

The pilot, which is voluntary and begins this month, seeks to reduce provider costs and cycle time by minimizing and eventually eliminating paper processing and mailing of medical documentation to review contractors. A list of review contractors that will accept esMD transactions can be found at http://go.usa.gov/kr4.

Watch for Patient Control Numbers on Remittance Advice

To ease payment posting, CMS has instructed intermediaries to include patient control numbers on remittance advice when reporting recoupment of overpayments. The change, which CMS announced in Change Request 7499 on Aug. 5, applies to the Fiscal Intermediary Standard System (FISS), Multi-Carrier System (MCS) and Viable Information Processing Systems (VIPS).

The patient control numbers will replace the Medicare health insurance claim number. The change is scheduled to be fully implemented by April 2, 2012.

Read more here.

Assessing and quantifying your risk for RAC recoupments

This article was excerpted from the new HCPro book, “The RAC Toolkit for Hospitals and Health Systems,” by Amanda W. Berglund, MS, MBA and Elizabeth E. Lamkin, MHA. Lamkin will be signing copies of the book at HCPro’s Medicare Compliance Forum, which takes place September 19 and 20 in Chicago.

Using Data Mining as a Component of Audit Defense

During the last several years, the Centers for Medicare & Medicaid Services (CMS) have been focused on preventing and detecting Medicare fraud and abuse more than ever. With the installment of the permanent Recovery Audit Contractor (RAC) program and the transition to Zone Program Integrity Contractors (ZPICs), methods of preventing fraud and abuse have become increasingly more organized and targeted.

Read more here.

Here Come Medicare Bundled Payments...Here Come the RACs

Healthcare providers may now apply to participate in a new program known as the Bundled Payments for Care Improvement Initiative (shortened to Bundled Payments Initiative [BPI]). The BPI (to be implemented by the new Center for Medicare and Medicaid Innovation) will align payments for services delivered across an episode of care, rather than paying for them separately.

Read more here.

AHA survey quantifies RAC medical necessity denials, process problems

Medical necessity denials are the top reason Medicare Recovery Audit Contractors have denied claims since first-quarter 2010, according to 2,024 hospitals responding to the American Hospital Association's quarterly RACTrac survey. Most of these medical necessity denials were for one-day stays found to be in the wrong setting, not because the care was medically unnecessary, according to the survey report, which contains new data from recent enhancements to the survey.

One-fourth of hospitals surveyed report appealing RAC denials, 84% of which are overturned. More than half of hospital respondents report problems with reconciling RAC recoupments and untimely RAC correspondence.

Hospital representatives are invited to attend an Oct. 5 webinar on the survey results and how to participate in the free web-based survey, which helps hospitals monitor the impact of RACs and advocate for needed changes to the program. For more information, visit www.aha.org/aha/issues/RAC/ractrac.html.

Medicaid RACs Anticipate Revenue Boom for Rest of 2011, 2012

Medicaid recovery audit contractors are expecting increased audit revenues for the third and fourth quarters of 2011 as well as 2012, according to PRG Schultz International in a RACmonitor report. Read more here.

New Point of Contact Named for CMS RAC Issues

The Centers for Medicare & Medicaid Services (CMS) today reported a new point of contact (POC) for all questions or concerns related to new posting notifications. Effective immediately, according to CMS, the new POC is Alpheus Parkes. CMS provided a contact number, 410-786-0282, as well as an email address which is alpheus.parkes.@cms.hhs.gov.

[ via RAC Monitor ]

Medicare Ups RAC Documentation Request Limit for Some Providers

Recovery auditors will be able to ask for up to 35 records every 45 days from providers that bill fewer than 27,200 claims, according to a RAC update from CMS. The change, effective Aug. 22, is an increase for those providers that now are limited to 34 additional documentation requests or fewer because of the relatively small number of claims they bill.

Read more here.

CMS raises RAC record request limit for providers with few Medicare patients

The Centers for Medicare & Medicaid Services has increased the number of medical records that Recovery Audit Contractors may request from hospitals and other facilities with a low volume of Medicare claims. Effective Aug. 22, RACs may request up to 35 records in a 45-day period from providers whose previous record request limit was 34 or less.

These are providers with a relatively low volume of Medicare patients, as CMS limits RAC requests for additional documentation to 1% of all Medicare claims submitted by the provider in the previous calendar year, divided by eight. For details, see the CMS notice.

Medicaid RAC Expects 'Revenues to Increase' from Recoveries in Q3 and Q4

The Medicaid Recovery Audit Contractors (RACs) could be gearing up to hit providers if one contractor’s quarterly report is any indication.

PRG Schultz International’s quarterly report for the quarter that ended June 30 noted it was awarded Mississippi’s Medicaid RAC contract and stated that it will “evaluate and bid for additional Medicaid RAC opportunities.” It also states that “while the magnitude and timing of additional health care claims recovery audit revenues are difficult to predict, we expect those revenues to increase in the third and fourth quarters of 2011 compared to the first half of the year.”

Read more here.

Demand letter responsibility shifted from RAC to MAC

Recovery audit contractors had previously been responsible for issuing demand letters to providers, but a transmittal released on July 29 will shift this responsibility to Medicare administrative contractors (MACs). This move reflects the program’s desire to increase consistency and efficiency through automation, according to CMS.

Learn more here.

Medicare RACs Have Collected Estimated $575M in Overpayments Since Oct. 2009

Recovery audit contractors have brought in an estimated $575.2 million in Medicare overpayments since Oct. 2009, and each quarter of FY 2011 has resulted in higher overpayments collected, according to a CMS report. CMS has also paid healthcare providers $109.6 million in Medicare underpayments since Oct. 2009.

Here are the other RAC collection data included in the report.

RAC Demand Letters Coming from MACs

Providers should look for demand letters for recovery audit contractor-identified overpayments from their Medicare Administrative Contractors (MACs) starting Jan. 1, 2012.

CMS will require MACs instead of RACs to send demand letters and follow the same process for other payment recoupments, states Change Request 7436 issued July 29. During the RAC demonstration and national program until now, the RACs had been required to send demand letters.

Read more here.

CMS issues quarterly RAC report

Recovery audit contractors have recouped an alleged $575.2 million in Medicare overpayments to health care providers since October 2009, and paid providers $109.6 million in underpayments, according to a new report from the Centers for Medicare & Medicaid Services. According to the report, Medicare RACs collected nearly $500 million in overpayments in the first three quarters of fiscal year 2011, up from $92.3 million in FY 2010.

However, AHA’s May RACTrac survey report indicates that about one in four of the claim denials reported to AHA were appealed, of which 71% were overturned on appeal. The CMS report does not reflect these overturned denials.

According to CMS, coding errors and a lack of sufficient documentation to support medical necessity were among the top overpayment issues cited in the four RAC regions. The RACTrac report contains additional information on medical necessity review denials and the administrative burden associated with the RAC program.

Reduce Federal Debt by Preventing Medicare Fraud Through Predictive Modeling

President Obama and Congress need to find a reasonable passage to safe harbor through the debt ceiling crisis by tomorrow. Ideally, the debt ceiling will be increased as a condition to generate serious savings in federal outlays. The use of predictive modeling to prevent Medicare fraud could present a solution that would save hundreds of billions of dollars over 10 years.

With passage in 2010 of HR 5297, Section 4241, Medicare now has statutory authority to use predictive modeling to prevent fraudulent payments to providers. This approach moves fraud mitigation away from the “pay and chase” strategies practiced by Recovery Audit Contractors and towards fraud prevention prior to payment. If such technology could be deployed on time as indicated by the 2010 bill, tens of billions of dollars could be saved by the end of 2011.

Read more here.

RACs Continue to Target Hospitals

The majority of the issues that three of the four Recovery Audit Contractors (RACs) posted last week targeted hospitals.

In RAC Region B, CGI Federal posted three issues for MS-DRG validation that excluded medical necessity. HealthDataInsights, the RAC in Region D, posted seven acute-inpatient hospitalization issues that did target medical necessity. DCS Healthcare in Region A posted one issue relating to durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). Region C RAC Connolly did not post issues last week.

Read more here.