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RECOVERY AUDIT CONTRACTORS (RAC) RETURN MARCH 1.

By Greg Piche'

 They?re back!!!. After a brief intermission to allow the Government Accounting Office to deal with challenges to contract awards, the Gov ernment is again gearing up for the 50 state roll out of the Recovery Audit Contract Program where contingent fee contractors get to rummage through the records of hospitals, physicians, DME suppliers  and other Medicare suppliers to see if they can enrich themselves on the identification and recovery of Medicare overpayments going back 4 years.  The wildly successful six state pilot recoupment program implemented in New York, California, Florida, Arizona,  South Carolina and Massachusetts will be extended to a wider group of states divided into 4 regions, artfully described as A, B,C & D. From 2005 to 2008, the pilot contractors earned themselves a heft $187,000.000.00 on $1.03,000, 000,000. in identified overpayments based upon their contingency ratios of 9 to 12.5%..

 

While it is tempting to wonder what the big deal is given the way mere billions are thrown around in government bailout programs, the idea is apparently to see if can be recouped by the government in order that it can pay for the oversight and give part of it back to the providers in additional coverage payments.  Think of it as kind of a  reverse kickback. The Government believes that the Medicare error rate runs about 9.8% in the provider favor and wants to reverse the flow. Although some errors are hard to justify like the poor patient who according to a hospital billing records received 5 colonoscopies in a single day.  (Hey it is possible, if unusual. Its dark in there and why not make sure?)

 The Contractors will be utilizing two levels of review, automated and complex. The automated will involve sophisticated computer analysis  and the complex will involve eyeball review of medical records. There are very strict guild lines for the production of charts and assertion of appeal rights that contain peril for the unwary.  If a facility or provider fails to respond with the production of records within 45 days of notice they can all be deemed overpayments and the recoupment process can begin (set offs and all that).  If only a percentage of the requested records are produced at a time the balance may be deemed overpayments.

 The appeal process is similar to Medicare Appeals, but holds some dangers as well. The first level permits a submission of a rebuttal determination request witching 15 days, but an appeal to the fiscal intermediary must be filed within 30 days in order to avoid an immediate recoupment otherwise if you don?t mind paying the money back immediately you can wait 120 days.

 Denied their a provider can appeal to the second level, to a QIC or Qualified Independent Contractor. within 180 days. (60 days if you want to keep the money for a while).The third level of appeals following a QIC denial is to the Office of Medicare Hearings and Appeals, which provides for filing within 60 days. The appeal will be before a federal Administrative Law Judge. There were about 5000 appeals to this level during the pilot program. Following a denial by an ALJ, one can appeal one can appeal to the Departmental Appeals Board (?DAB?) of the Medicare Appeals Counsel. within 60 days. After that the only option is filing a request for judicial review by a federal district court. 

 The Contractors are obviously going to be looking for the right dollar claims for  potential recovery trying to ride the Pareto effect where 80% of the recovery is likely to come from 20% of the review. That suggests that advance preparation, documentation, planning, vigilance and management will  be extremely important when the knock on the door comes. Every Medicare provider should if possible have a preaudit and a written policy for approaching the inevitable day.

 RAC ? the name is brilliant. It is a prime example of what is called the ?contrived acronym? that is one that has been deliberately designed in such a way that it will be especially apt as a name for the thing being named (such as by having a dual meaning or by borrowing the positive or negative connotations of an existing word.  One can hear the echoes of medieval prisoners screaming in pain as the wheel stretches their cracking bodies across a wooden plank.

Full post as published by Healthcare Law Blog on February 20, 2009 (boomark / email).