Rac FAQs

RAC FAQs The following pages contain FAQs and answers pertaining to the RAC audits that you have undoubtedly heard about. The questions and answers are compiled from the CMS website. We hope you will find them informative.

Why Is CMS Using Recovery Audit Contractors? Section 306 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) required CMS to complete a demonstration project to demonstrate the use of recovery audit contractors in identifying underpayments and overpayments and recouping overpayments under the Medicare program for services for which payment is made under part A or B of title XVIII of the Social Security Act. The demonstration operated from March 2005 through March 27, 2008. Section 302 of the Tax Relief and Health Care Act of 2006 (TRHCA) required the Department of Health and Human Services (DHHS) to make the RAC program permanent and nationwide by no later than January 1, 2010. CMS is planning a gradual expansion to all 50 states. The expansion schedule can be viewed at www.cms.hhs.gov/RAC.

Whose Claims Will Be Reviewed Under The Recovery Audit Contractors (RAC) Program? Physicians, providers and suppliers who submit claims to Medicare.

Will Critical Access Hospitals (CAH) Be Subject To RAC Review? If So, How Will The Funds be Recouped? Yes, Critical Access Hospitals are subject to RAC review. ,[object Object]

If the cost report has already had a final settlement, the amount will be demanded and then offset against future claims if not paid in full by the provider. ,[object Object]

How Will The RAC Choose The Health Care Entity That Is To Be Reviewed For Over-payments or Underpayments & Which Claims To Review? Will It be A Random Process? The RACs will use their own proprietary software and systems, as well as their knowledge of Medicare rules and regulations, to determine what areas to review.

How Long Does A Provider Have To Submit Medical Records When Requested By a RAC? & Will CMS Use Calendar Days Or Business days When Determining The Number Of Days A Provider Has to Submit medical Records? ,[object Object]

Providers may request an extension at any time prior to the 45th day by contacting the RAC.

CMS will utilize Calendar Days when making these determinations. ,[object Object]

What Is The Reimbursement Procedure And Rate For Photocopy Charges Associated With Records For RAC Audits? RACs are required to reimburse PPS providers and Long Term Care providers. The reimbursement rate is 12 cents per page for reproduction of medical records. Facilities are not required to submit vouchers to the RAC requesting payment. Rather, the RACs will automatically issue payments to the hospitals for photocopying charges. RACs are required to pay for copying on a monthly basis. All checks should be issued within 45 days of receiving the medical record.

If I Receive A Demand Letter From a RAC, Because A Service Didn't Meet Medicare's Medical Necessity Criteria For An Inpatient Level Of Service, Can We Re-bill All The Services On An Outpatient Claim? Providers can re-bill for Inpatient Part B services, also known as ancillary services, but only for the services on the list in the Benefit Policy Manual. That list can be found in Ch. 6, Section 10: http://www.cms.hhs.gov/manuals/Downloads/bp102c06.pdf. Rebilling for any service will only be allowed if all claim processing rules and claim timeliness rules are met. There are no exceptions to the rules in the national program. The time limit for re-billing claims is 15-27 months from the date of service. These normal timely filing rules can be found in the Claims Processing Manual, Chapter 1, Section 70: http://www.cms.hhs.gov/manuals/downloads/clm104c01.pdf.

Do Recovery Audit Contractors Look For Underpayments? What Happens If They Find An Underpaid Claim? Yes, Recovery Audit Contractors (RAC)s will identify underpayments as well as overpayments. In situations where a RAC identifies both overpayments and underpayments for a provider, the RACs offset the underpayment from the overpayment. In situations where a RAC identifies an underpayment for which there is no overpayment from which to offset, the RACs will inform the carrier or intermediary who will proceed with the claim adjustment and payment to the provider. A MLN Matters article, SE0617, was released on 04/10/2006 with additional information for providers concerning the identification of an underpayment by a RAC. The MLN Matters article can be found at www.cms.hhs.gov/MLNMattersArticles/download/SE0617.pdf.

Under What Circumstances Can A RAC Make A Finding, That An Overpayment Or Underpayment Exists,Without Requesting Medical Records? RACs may use automated review (where NO medical record is involved in the review) ONLY in situations where there is certainty that the claim contains an overpayment. Automated review must: a) Have clear policy that serves as the basis for the overpayment (“clear policy” means a statute, regulation, National Coverage Determination, coverage provision in an interpretive manual, or Local Coverage Determination that specifies the circumstances under which a service will ALWAYS be considered an overpayment); b) be based on a medically unbelievable service; or c) occur when no timely response is received in response to a medical record request letter.

Under What Circumstances Will A RAC Request Medical Records In order To Determine If An Overpayment Exists? RACs must use *complex review in situations where there is a high probability (but not certainty) that the claim contains an overpayment. *(A complex review is where medical records ARE involved in the review)

Will CMS require Recovery Audit Contractors (RAC) to post all HCPCS/CPT Codes included in their audit that are posted on their websites? The Statement of Work for the Recovery Audit Contractors (RAC) requires CMS approval on all new issues prior to widespread review. As a condition of approval, all RACs are required to post the new issue to the RAC website prior to releasing demand letters and/or additional documentation requests (outside of the ten (10) claim sample). At this time CMS requires a description of the issue, dates of service, a link to the applicable policy and the provider type impacted. CMS encourages all RACs to post affected codes when less than 5 codes are present for the issue. When not present, CMS recommends that providers use the applicable policy to locate the affected codes.

If A Provider Repays Or Medicare Recoups an alleged Overpayment Identified By The RAC, And The provider Later Wins An Appeal, Will CMS Reimburse With Interest? CMS is required to pay interest when an appeal decision is favorable to the provider. The payment of interest, in response to a favorable provider appeal decision, is determined by CMS’ interpretations of the appeal regulations. These regulations determine the process for all overpayments, not just RAC identified overpayments.

Will The Recovery Audit Contractors (RAC) Appeal Process Mirror The Regular Medicare Appeal Process? The Medicare Appeals process will remain the same for physicians under Part B and Part A non-inpatient claims. The only difference under Part A is for the inpatient hospital claims under the Prospective Payment System (PPS). In the current appeals process, the first level appeal will go to the Quality Improvement Organization (QIO); however, the RAC appeals will go to the Fiscal Intermediary that processed the claim.

Will The Timing For Appeals By The Medicare Contractors Be The Same For The Recovery Audit Contractors? Yes. The timeframe for filing an appeal remains the same.

If A Provider Performs a Self Audit, How Should They Notify The RAC? If a provider does a self-audit and identifies improper payments, the provider should report the improper payments to Medicare. The exact information necessary for the self referral can be determined by contacting your local carrier, FI or MAC (your claim processing contractor). If the claim processing contractor agrees that they are improper, the claims will be adjusted and excluded from RAC review.

If A Provider Has Performed a Self -Audit Prior To A RAC Review, And Wants To Extrapolate These Findings, Will All These Claims Included In A Self- Audit Be Excluded From RAC Review? How Should They Notify The RAC? If a provider self-discloses a payment error; and the Claims Processing Contractor confirms that a payment error exists, and the sampling/extrapolation methodology used was correct, then these claims will not be reviewed by the RAC. The claims processing contractor will exclude the self-disclosed claims in the RAC data warehouse.

How Are The (Rac)s Paid For Finding And Recovering Overpayments? RACs are paid on a contingency basis (i.e., they retain a portion of the monies recovered) for all accurately identified overpayments.

How Are RACs Paid For Finding Underpayments? RACs are paid on a percentage basis for all underpayments identified and recovered.

Will The Recovery Audit Contractors Replace All Current Review Entities? No. Other entities such as: ,[object Object]

Program Safeguard Contractors,

Office of Inspector General, and

Quality Improvement Organizations (QIO) could still review a provider’s claims. The RACs will not review a claim that has previously been reviewed by another entity.

Who Should Providers Contact With Questions Concerning RAC Communications? Providers should first attempt to contact the Recovery Audit Contractors (RAC) through the customer service line. If that does not answer the provider’s questions and/or concerns, then the provider can contact CMS. CMS has set up a special email address for the provider community to use. It is CMS RAC@cms.hhs.gov.

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