November 10, 2008
Medicare Recovery Audit Contractors (RACs) are private companies that review Medicare professional and facility claims and are paid a contingency fee for any overpayments (and yes, underpayments) they can identify. Anesthesiology and other physician practices have been nervously contemplating the potential threat of the (RAC) program in at least the six states where CMS has conducted a demonstration project over the last few years.
Between 2005 and March 2008, the RACs netted $693.6 million for CMS, with 90 percent of the restitution coming from hospital and inpatient rehabilitation facilities, 4 percent from durable medical equipment vendors, and 6 percent from physicians and "supplers". Very few of the problems found by the RACs were underpayments, very few decisions were overturned on appeal, and CMS' costs were just 20 cents for every dollar collected.
Congress and CMS deemed the demonstration a great success and made the program permanent. The Tax Relief and Health Care Act of 2006 (the same TRHCA that brought us the Physicians Quality Reporting Initiative, incidentally) required CMS to have a national RAC program in place by 2010. CMS set out to beat the deadline.
The RAC contractors are independent of the MAC or Medicare Administrative Contractors that have been replacing the old Medicare carriers. Considering the not-so-smooth introduction of the MAC contractors, it is good that CMS has "developed a strategy to ensure that the RAC program does not interfere with the transition... This will allow the new MACs to focus on claims processing activities before working with the RACs" CMS Press Release July 11, 2008
Last month CMS awarded its first four permanent RAC contracts covering 19 states—and two unsuccessful bidders immediately filed lawsuits. The effect was an automatic stay, which caused all RAC work to stop—mid-outreach seminar—until the Government Accountability Office (GAO) decides whether the bid selection process was lawful. The GAO has 100 days within which to do so.
Physicians and other providers are being advised to "use the breathing space to prepare to respond to audit requests." (Part B News Online, November 10, 2008). Checklists of tasks to prepare for such audits will be daunting—and the costs will certainly seem out of proportion to the average $216 overpayment recovered from physicians in by the California RAC demo in 2006. We urge you to remember that there are no new billing rules or restrictions on payments that you need to master. If your compliance program is solid now, and you are already using systems and safeguards to:
- Detect and prevent overbilling Medicare,
- Document, document, document, and
- Train clinical and administrative staff in compliance,
the RAC that will eventually be operating in your area should not pose any new threat. If you have compliance questions or concerns, ABC will be pleased to help our current and future clients. Please contact info@anesthesiallc.com. Specific questions about the RAC program should be directed to Karin Bierstein, JD, MPH, Vice President for Strategic Planning and Practice Affairs.
