RAC Audits

Recovery Audit Defense

Texas Lawyers for Medicare RAC Audits

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 (RAC) program.

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.

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The health and medical lawyers at Hendershot Cowart P.C. handle a range of Medicare matters. Call to speak with an attorney about your recovery audit and how to respond.

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.

Identify the RAC for Your State

There are several different RACs with areas of oversight separated into five regions, four of which are geographical.

  • Region 1 covers CT, IN, KY, MA, ME, MI, NH, NY, OH, RI, and VT and is served by Performant Recovery, Inc.
  • Region 2 includes AR, CO, IA, IL, KS, LA, MO, MN, MS, NE, NM, OK, TX, and WI. The RAC for Region 2, including Texas, is Cotiviti, LLC.
  • Region 3 includes AL, FL, GA, NC, SC, TN, VA, WV, Puerto Rico and U.S. Virgin Islands. The RAC is Cotiviti, LLC.
  • Region 4 is AK, AZ, CA, DC, DE, HI, ID, MD, MT, ND, NJ, NV, OR, PA, SD, UT, WA, WY, Guam, American Samoa and Northern Marianas. The RAC for Region 4 is Cotiviti GOV Services.
  • 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 healthcare fraud regulators. The RAC for Region 5 (DMEPOS) is Performant Recovery, Inc.

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 to detect and collect overpayments. CMS hires these private contractors to assess healthcare 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).

What Is the RAC Audit Process?

Recovery 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.

There are generally two types of RAC audits:

  • Automated RAC audits. 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. An auditor may take the further step of reviewing your medical charts. You may or may not be aware that your claims are being audited.
  • Complex RAC audits. If the RAC determines that further review is necessary, an auditor will send an Additional Document Request (ADR). As a Medicare provider, you are required to cooperate and participate. At this point, many providers seek a healthcare attorney to counsel them on their rights, assist with document collection and review, and ensure you respond in a time-sensitive manner.

Once a determination is made, a formal letter is sent to the practice generally detailing:

  • The coverage, coding, or payment policy in violation;
  • The reason for the review;
  • A description of the overpayment;
  • Recommended corrective actions;
  • An explanation of the physician's right to submit a rebuttal statement prior to recoupment of any overpayment;
  • An explanation of the procedures for recovery of overpayments;
  • Notification of the physician's right to request an extended repayment schedule; and
  • Information on the physician's right to appeal.

If you receive a letter from a RAC notifying you of a recovery, it's important not to panic. There is often a discussion period for all denied claims. This is your opportunity to provide additional information and documentation to the RAC for its consideration. You also have the right to appeal the decision. Because RAC audits are 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 at this stage.

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.

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

How Do You Appeal an RAC Determination?

If you believe the overpayment finding is unjustified, you may file an appeal. There are five levels of RAC appeals:

  1. Level 1: Redetermination. As a provider, you must file a request for redetermination – in writing – within 120 days from the date of receipt of the initial determination. A decision will typically be issued within 60 days of receipt.
  2. Level 2: Reconsideration. You have 180 days of receipt of the redetermination decision to appeal to the second level. Again, the request must be filed in writing. Your request will be reviewed and decided by a Qualified Independent Contractor (QIC). A decision is typically issued within 60 days of receipt.
  3. Level 3: Administrative Law Judge (ALJ) Hearing. At the third level of appeal, an Administrative Law Judge will review your case. You must request a hearing within 60 days of receipt of the Reconsideration decision letter. Hearings are generally held by videoconference or telephone, though you may request it to take place in person. However, the ALJ may come to a judgement without testimony if he or she feels there is sufficient information. This level of appeals is only available to you if the amount in controversy after the QIC decision is over a certain amount. The Judge will issue a decision within 90 days.
  4. Level 4: Review by the Medicare Appeals Council. File your written request for Council review within 60 days of receipt of the ALJ's decision. The Council will generally make its decision within 90 days. If the Council cannot complete its decision in the applicable timeframe, it will inform you of your rights and procedures to escalate the case to U.S. District Court.
  5. Level 5: Judicial review in U.S. District Court. You have 60 days from receipt of the Council's decision – or after the Council ruling timeframe expires – to request judicial review. You may only request a judicial review if a certain minimum dollar amount remains in controversy following the Council decision (this amount is adjusted annually; the 2022 minimum "amount in controversy" is $1,760). The U.S. District Court will make the final decision.

How Can Healthcare Providers & DME Suppliers Avoid RAC Recovery 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 healthcare 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).

Call (713) 909-7323 or contact us online to speak with a Nationwide Medicare Recovery Audit Lawyer.

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