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CMS To Begin RAC Prepayment Reviews on August 27th.

RAC Prepayment Reviews(August 17, 2012): Beginning August 27, 2012 CMS will begin what has been referred to as the Recovery Audit Prepayment Demonstration (RAPD).  RAPD was initially scheduled to begin January 1 of this year, but was postponed while CMS reviewed comments that it had received.  The demonstration project will now run until August 26, 2015. The demonstration project will involve 11 states – Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri.  CMS has stated that the demonstration will focus on claims with a high risk of fraud, beginning with those involving short stay inpatient hospital services.  Specifically, CMS has announced that the demonstration will initially focus on MS-DRG 312, related to syncope and collapse.  According to CMS’s website, the program will eventually expand to include conditions such as diabetes and transient ischemia.  RAPD will not replace MAC prepayment reviews.  Rather, RACs and MACs ‘will coordinate to avoid duplicate efforts.”

According to CMS, providers with claims identified for RAC prepayment reviews will have 30 days to respond to requests for additional documentation (a/k/a ADRs).  If they do not respond timely, the claim will be denied.  Providers are to receive determinations within 45 days of submitting the relevant documentation.

I.  RAC Prepayment Reviews Process:

While RACs will perform the actual audit, ADRs and review results will come from your MAC.  In this process RACs are supposed to send a “detailed review and results letter,” which presumably will be communicated to the provider as part of the determination.  Providers will have the same appeal rights as with other denied Medicare claims, and according to CMS, claims involved in prepayment denials are not supposed to be part of post-payment reviews by a CMS contractor at a later time.

II.  Additional Thoughts:

This is yet another effort by CMS to address concerns over fraudulent claims on the front end.  Providers in the affected states should adjust their processes for responding to RAC audits to incorporate the demonstration process, including tracking and responding to ADRs and other prepayment requests for additional information within the specified time frames.   Additionally, they should specifically focus their compliance initiatives on review of short stay inpatient claims – especially claims for MS-DRGs that are expected to be covered by the demonstration in its initial stages.  This should include as appropriate pre-submission reviews, audits, and education of staff.  Additionally, providers should remember that unfavorable determinations during RAC prepayment reviews  under the demonstration project may be appealed through the Medicare appeals process, and should be prepared to respond appropriately.

Michael CookAnyone desiring additional information on the demonstration or how to prepare and respond to RAC prepayment reviews should contact Michael Cook in the Washington, DC office of Liles Parker at (202) 298-8750. Michael is a talented health law attorney with years of experience handling Medicare and Medicaid fraud and abuse issues. In addition, he is skilled at representing providers and health systems in negotiations with states, managed care plans, and HHS.

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