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RAC Audits

Texas Lawyers for Medicare Compliance, Recoupment & Appeals

The Centers for Medicare & Medicaid Services (CMS) utilizes many tools for investigating improper payments to providers and suppliers, recovering overpayments, and exercising its authority to engage in enforcement actions or refer cases to federal authorities over alleged health care fraud. One of these tools is the Medicare Fee for Service (FFS) Recovery Audit Program.

The FFS Recovery Audit Program has a mission to protect Medicare and its beneficiaries, and 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).

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

Recovery Audit Contractor (RAC): The Basics

1. What RACs Do – RAC’s are private, third parties contracted by the federal government to review claims on a post-payment basis. There are several different RACs with areas of oversight separated into five regions, four of which are geographical. Cotiviti, LLC is the RAC for Region 2, which includes Texas and much of the central portion of the country. Region 5 is specially structured to review DMEPOS (Durable Medical Equipment, Prosthetics, Orthotics, and Supplies) and Home Health / Hospice claims, which have become a top focus for health care fraud regulators.

2. Scope of Oversight – Any doctor / medical practice which submits claims to a government program can face a Medicare RAC audit, including:

  • Hospitals
  • Medical practices
  • Nursing homes / assisted living facilities
  • Home health agencies
  • DMEPOS suppliers
  • Any provider / 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.

3. RAC methods – 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

4. RAC impact / Criticism– RACs are a big benefit to a federal government keen on protecting itself and its beneficiaries from waste, fraud, and abuse. In FY 2013 alone, RACs identified $3.75 billion in improper payments, nearly all of which were 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 by commission, arguably incentivizing them to find more “improper payments” to increase their bottom line.

What Providers / Suppliers Can Do to Prepare & Appeal RAC Audits

Reducing exposure to potentially harmful consequences for your medical business requires intelligent, targeted work – on both a proactive basis, and in response to audits, red flags, and any referrals for further health care fraud investigation.

Before an Audit: Preparation & Proactive Counsel

  • 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 / 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).

When You’re Audited: Response & Appeals

When audits are initiated, RACs notify providers / suppliers, 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 the RAC auditor, it’s important not to panic – you have the right to appeal the decision. RAC appeals have 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. 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).

Though you shouldn’t panic, you should take steps to formulate an appropriate response strategy which aims 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.

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.

Call to Speak with a Medicare Recoupment / RAC Lawyer

Hendershot, Cannon & Hisey, 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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