RAC Audit Defense

Texas Lawyers for Medicare Compliance, Recoupment and Appeals

The Centers for Medicare and Medicaid Services (CMS) utilizes many tools for investigating improper payments to providers and suppliers, recovering overpayments, and taking enforcement actions or referring cases to federal authorities over alleged healthcare or Medicare fraud. One of these tools is the Medicare Fee for Service (FFS) Recovery Audit Contractors program.

What Does a Recovery Audit Contractor (RAC) Do?

RACs are private, third parties contracted by the federal government to review claims on a post-payment basis. CMS hires these private contractors to assess health care records for billing problems such as improperly coded services, duplicate services and billing for non-covered services.

RACs mission is to protect Medicare and its beneficiaries; its functions include:

  • Flagging and correcting improper Medicare payments;
  • Collecting overpayments for services provided to Medicare beneficiaries; and
  • Identifying underpayments so CMS, Carriers, and MACS, can implement actions to prevent future improper payments (i.e. providers can avoid submitting non-compliant claims, CMS can lower error rates, and taxpayers / beneficiaries benefit).

There are several different RACs with areas of oversight separated into five regions, four of which are geographical. Texas falls into Region 2 which includes much of the central portion of the country and is overseen by the Region 2 RAC, Cotiviti, LLC. Region 5 is a specially structured, nationwide region created to review DMEPOS (durable medical equipment, prosthetics, orthotics, and supplies) and home health or hospice claims, which have become a top focus for health care fraud regulators.

    Hendershot Cowart P.C. health and medical lawyers handle a range of Medicare matters. Call to speak with an attorney about your case.

    Which Providers Are Subject to RAC Audits?

    Any healthcare entity or medical practice that submits claims to a government program can face a Medicare RAC audit, including:

    • Inpatient or outpatient hospitals
    • Medical practices
    • Nursing homes and assisted living facilities
    • Home health agencies
    • Durable medical equipment (DME) physicians and suppliers
    • Ambulatory surgical centers
    • Any provider or supplier submitting claims to Medicare

    These audits are not singular, one-time reviews, nor are they sporadically or rarely performed. They’re conducted under a systematic process to ensure consistent compliance with billing requirements, documentation rules, and clinical payment criteria.

    What Triggers an RAC Audit?

    RACs utilize software and data mining to review medical records for outliers, unusual patterns, and possible errors in claims paid within the past three years. They may use automated, semi-automated, or “complex” review processes, with each process progressively increasing the scope of manual review. Common billing issues identified by RACs include:

    • Duplicate services
    • Improperly coded services
    • Billing for non-covered services
    • Billion for services not rendered
    • Upcoding or bundling

    Criticism of the RAC Program:

    The Recovery Audit Contractor (RAC) program is big business for the federal government. In FY 2019 alone, RACs identified and collected $162 million in overpayments. Though the impact is clear, so is criticism of the Recovery Audit Program. The American and Texas Medical Associations believe RACs misdirect efforts toward practices making good-faith compliance efforts, rather than identifying ways to reduce common coding and billing mistakes. Additionally, RACs are paid on a contingency fee basis, arguably incentivizing them to find more “improper payments” to increase their bottom line.

    How Can Healthcare Providers & Suppliers Avoid RAC Audits?

    Take proactive steps to reduce your exposure to the potentially harmful consequences of post-payment red flags which may lead to RAC audits or referrals for further health care fraud investigation from other government enforcement agencies.

    Consider adopting these best practices to avoid RAC audits:

    • Assess risks for billing issues through internal audits on a regular and proactive basis.
    • Review billing processes and develop compliance plans and billing practice standards.
    • Identify patterns, and determine corrective actions to avoid improper payments;
    • Review practices and policies which can potentially lead to billing errors (i.e. untrained staff, time constraints, misinterpreting rules, failures to stay apprised of CMS updates and HHS bulletins).
    • Review previous RAC audits, monitor regional RAC public progress reports, and review OIG annual work plan audit areas.
    • Evaluate technology, including electronic health record (EHR).

    How to Prepare for and Respond to a RAC Audit:

    When an audit is initiated, the RAC will notify the provider or supplier, and provide information regarding the:

    • Violation and reason for review;
    • Overpayment description and recommended corrective actions;
    • Information about right to submit rebuttal statements before recoupment;
    • Explanation of the overpayment recovery process;
    • Information about the right to request extended payment plans; and
    • Details about the right to appeal.

    If you have received a letter or notice from an RAC auditor, do not panic – you have the right to appeal the decision.

    Because Medicare billing is complex, and RAC audits a potentially dangerous starting point for costly recoupment or further Medicare fraud investigation, it is strongly recommended providers seek the assistance of experienced and qualified health and medical law attorneys.

    An experienced RAC defense attorney can help you formulate an appropriate response strategy to alleviate the invasive and time-consuming nature of audits, minimize excessive costs, and reduce exposure to adverse repercussions to medical licenses, Medicare enrollment status or billing privileges, and civil or criminal liability.

    What Is the RAC Audit Process?

    The RAC appeals process has five different levels:

    1. Medicare Administrative Contractor (MAC) Redetermination (request deadline: within 120 days of determination).
    2. Qualified Independent Contractor Reconsideration (request deadline: within 180 days of redetermination decision).
    3. Administrative Law Judge (ALJ) Hearing or Office of Medicare Hearing and Appeals Review (request deadline: within 60 days of reconsideration decision).
    4. Medicare Appeals Council Review (request deadline: within 60 day of ALJ decision).
    5. Federal Judicial Review in U.S. District Court (request deadline: within 60 days of Council decision or after expiration of ruling timeframe, and only if monetary dispute meets threshold).

    Call to Speak With a Medicare Recoupment & RAC Lawyer

    Hendershot Cowart P.C. has the experience to assist providers and suppliers of all types in a range of Medicare matters – from enrollment denials to billing privilege revocations and provider exclusions. We’re available to help clients prepare for and respond to RAC audits, Medicare recoupment, and potentially harmful enforcement actions or fraud investigations they may face.

    Call (713) 909-7323 or contact us online to speak with a lawyer.

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