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CMS Announces a Pause in RAC Operations

CMS Pause in RAC Operations

(March 6, 2014): The Centers for Medicare & Medicaid Services (CMS) recently announced that there would be a “pause” in Recovery Audit Contractor (RAC) operations.  What is a “pause” in the program?  According to CMS, the goal of suspending RACs from conducting additional audits is to allow these contractors to complete all remaining claim audits and other processes by the end date of their current contracts before CMS begins the procurement process for the next round of Recovery Audit Program contracts.  Furthermore, this RAC pause “will allow CMS to continue to refine and improve the Medicare Recovery Audit Program.”

I.  Important Dates to Remember with Respect to the Pause in RAC Operations:

Health care providers should note the following timeline that is being used to wind down current RAC operations.

  • February 21, 2014: the last day a RAC may send a postpayment Additional Documentation Request (ADR);
  • February 28, 2014: the last day a Medicare Administrative Contractor (MAC) may send prepayment ADRs for the Recovery Auditor Prepayment Review Demonstration; and
  • June 1, 2014: the last day a RAC may send improper payment files to the MACs for adjustment.

II. Upcoming RAC Changes:

CMS also announced a number of “improvements” that will be implemented under the next RAC program contract awards. Notably, these changes are being implemented in response to industry feedback. CMS believes that these changes will “result in a more effective and efficient program, including improved accuracy, less provider burden, and more program transparency.”  Specifically, the following changes will be effective:

  • RACs must wait 30 days to allow for a discussion before sending the claim to the MAC for adjustment. Providers will not have to choose between initiating a discussion and an appeal;
  • RACs must confirm receipt of a discussion request within three (3) days;
  • RACs must wait until the second level of appeal(i.e., reconsideration) is exhausted before they receive their contingency fee;
  • CMS is establishing revised ADR limits that will be diversified across different claim types (e.g., inpatient, outpatient); and
  • RACs will be required to adjust the ADR limits in accordance with a provider’s denial rate (providers with low denial rates will have lower ADR limits while provider with high denial rates will have higher ADR limits).

III.  Final Remarks:

Has your hospital, practice, Home Health Agency, Hospice, DME Company, or PT / OT / ST Clinic been audited by a RAC or Zone Program Integrity Program (ZPIC)?  Just because RACs are taking an operational “pause,” does not mean that you may not be affected in the future.  It may only be a matter of time before your practice is negatively burdened by a RAC audit.  Despite your best efforts to follow Medicare’s directives, your organization may still be placed on prepayment review or subjected to a full-blown postpayment audit.  Should you receive a request for records from a RAC or ZPIC, being prepared (in advance of receiving an audit letter) can greatly assist your efforts to show that the care and treatment services you are providing do, in fact, qualify for coverage and payment.  If you have any questions or concerns regarding any ongoing – or future – RAC or ZPIC audit, please do not hesitate to give us a call! We would be more than happy to assist you with your compliance needs.

Healthcare LawyerRobert W. Liles, Esq., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Liles Parker  attorneys represent health care providers and suppliers around the country in connection with Medicare audits by RACs, ZPICs and other CMS program integrity contractors.  The firm also represents health care providers in HIPAA Omnibus Rule risk assessments, privacy breach matters, State Medical Board inquiries and regulatory compliance reviews.  For a free consultation, call Robert at:  1 (800) 475-1906.

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