Recovery Audit Contractor: Physician Issues

What are the RACs?

The Medicare Modernization Act of 2003 established the Medicare Recovery Audit Contractor (RAC) program covering healthcare entities such as hospitals and physician practices effective Jan. 1, 2010.  The RAC program is a cost containment effort aimed at reducing improper payments (overpayments and underpayments) made by Medicare, as well as identifying process improvements to reduce or eliminate future improper payments. While hospitals have been receiving RAC denials for some time, we are beginning to see an increase in physician specific issues posted by the RAC.

Here are some critical facts:

• RAC auditors work on commission only. (Connolly, our RAC in Region C, covering Georgia, gets 9 percent of all overpayments and underpayments they find.)
• RAC audits are a way for Medicare to reclaim payments made to providers.
• RAC auditors can go back as many as three years and review cases in which a provider could be required to pay back any reimbursements where the RAC finds overpayments. 

Why should you care?  

Effects on revenue: As mentioned above, the RAC auditor’s incentive is to find money in the provider claims data. The RAC program uses sophisticated data analysis techniques to identify those claims most likely to contain an error, such as duplicate payments, medical necessity and coding errors, creating an overpayment.  

Administrative burden: The rules do limit the number of medical records that the RAC is authorized to request from a physician practice based on its size / billing activity.  In terms of frequency of requests, the RAC can request medical records from a physician practice every 45 calendar days or a maximum of eight requests per year creating the need for production of copies of records by the practice for the RAC review. 

What can you do to prepare?

RACs cannot begin requesting medical records until an “issue” has been approved by CMS nationally.  Approved issues will be posted on the RAC website. It is important that someone in your practice stay abreast of the issues that Connolly posts in order to analyze their potential impact on your practice.  Use the following link to Connolly’s website to view the current list of all approved RAC issues for both inpatient/outpatient hospital services as well as physician specific services. http://www.connolly.com/healthcare/pages/ApprovedIssues.aspx

Also, please feel free to call the Coding Compliance team at any time at 678-331-6890 for consultation.