CMS puts the brakes on RAC audits for now, and implements changes for when they return

April 30th, 2014 - Scott Kraft
Categories:   Audits/Auditing   Denials & Denial Management  
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Good news for physician practices that don’t like getting demand letters and record requests from Recovery Audit Contractors (RACs). All those requests will stop by Feb. 28 on orders from CMS. RACs will be back once CMS awards new RAC contracts, but those awards may not come soon. When they do, five key changes will be in place.

Under the CMS order, RACs are to stop sending post-payment Additional Documentation Requests (ADRs) as of February 21. Pre-payment ADRs must stop by Feb. 28. Finally, the RACs have been ordered to send all of their improper payment adjustment files to the Medicare Administrative Contractor (MAC) by June 1.

Once those last files are sent to the MACs and demand letters are sent to the providers, the appeal process can commence for the last set of RAC judgments prior to the new agreements being put into place. The move may help clear a massive backlog for Administrative Law Judge (ALJ) hearings. Providers are regularly waiting more than a year to have appeals heard before the ALJ.

It may be a bit of time before the RACs return, though CMS has said they are coming back. A review of the federal contracting web site shows that CMS has not yet put out formal requests for proposal to issue new RAC contracts.

Claims you are submitting during the period when there are no RACs are still subject to review. Your MAC may initiate a review, or the OIG or Zone Program Integrity Contractors, among others. And when the RACs return, claims filed during this period are still subject to a RAC review.

Here are the five changes that will be made to the RAC review process under the new RAC agreements, according to CMS:
  1. Discussion period: Providers may appeal a RAC decision at any time without that automatically halting a 30-day discussion period between the RAC and the provider that is required before the claim goes on to the MAC for adjustment.
  2. Confirmation of discussion request: RACs must confirm they’ve received a discussion request within 3 days.
  3. Contingency fee: RACs will not be paid their contingency fee until the claim gets past the second level of appeal, rather than being paid after payments are recovered, even if there is an appeal in process.
  4. ADR limits for facility: Revised ADR limits will be broken down by department (inpatient, outpatient, etc.) within a facility to be sure a smaller department doesn’t get a disproportionately large share of requests.
  5. ADR limits based on denial rate: ADRs will be limited based on the provider’s denial rate, so that providers with a lower denial rate will see fewer ADRs than one with a higher denial rate.


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