Handling a Medicare Recovery Audit Contractor (RAC) Audit

Handling a Medicare Recovery Audit Contractor (RAC) audit can be a complex process. It is crucial to get it right to avoid potential penalties and to ensure the continued success of your healthcare organization.

The Recovery Audit Contractor (RAC) carries out audits for claims paid within the previous three years, employing three distinct review methodologies:

1. Fully Automated reviews, where there’s no need for a medical record.
2. Semi-automated reviews, where claims are scrutinized utilizing data and potentially supplemented with human review of a medical record or other supporting documentation.
3. Detailed/Complex reviews, where the examination necessitates a medical record.

Here are some steps to guide you:

1. Understand the RAC Program: Before handling an audit, it’s important to understand what it entails. The RAC program is designed to identify and correct improper payments made in the Medicare Fee-For-Service (FFS) program. These could be either overpayments (where too much money was paid) or underpayments (where insufficient money was paid).
2. Designate a RAC coordinator: This person will manage all communication with the RAC and coordinate audit-related activities in your organization. They should be well-versed in Medicare billing, coding, medical record documentation, and other related aspects.
3. Conduct a Self-Audit: Before the RAC audit, conducting a self-audit is beneficial. This will allow you to identify and correct any errors or issues before the RAC audit. You might also uncover underpayments that you can claim.
4. Document everything: Proper documentation is critical during an audit. Ensure all medical records, billing information, and other documents related to the services in question are accurate and readily available. This can include patient records, procedure codes, diagnostic codes, etc.
5. Respond promptly: You’ll typically have 45 days to respond once you receive an audit notification. Make sure you respond within this timeframe to avoid any issues. If you can’t gather the necessary information in time, you might be able to request an extension.
6. Understand your rights: If the RAC identifies overpayments, you can appeal. There are five levels of appeal in Medicare. Also, remember that the RAC is paid on a contingency fee basis, which means they are incentivized to find overpayments. So, it’s important to double-check their findings.
7. Implement a Compliance Program: To reduce the risk of future audits, it’s beneficial to implement a compliance program. This program should ensure that your billing, coding, and documentation practices are compliant with Medicare requirements.
8. Train Staff: Regular training can help ensure your staff understands and follows Medicare billing, coding, and documentation requirements. This can reduce the risk of errors that could lead to overpayments or underpayments.
9. Legal Consultation: If the stakes are high, it might be worth getting legal advice. Healthcare attorneys with experience in RAC audits can guide you through the process and help protect your interests.
10. Post-Audit Review: After the audit, review the findings and identify any areas where you can improve. This can help reduce the risk of future audits and improve your compliance with Medicare requirements.
11. Stay Current with Changing Regulations: Medicare regulations can and do change often, and keeping up-to-date with these changes is vital. A good way to do this is by subscribing to newsletters from the Centers for Medicare & Medicaid Services (CMS) and other related regulatory bodies.
12. Engage in Open Communication with RAC: It’s important to maintain open lines of communication with the RAC. If there are any doubts or misunderstandings, get clarification as soon as possible. Additionally, don’t hesitate to request additional time if needed to compile the necessary documents.
13. Maintain Patient Care Quality: The primary focus should always be on providing the best patient care. Regardless of audit procedures, ensure that the standard of patient care does not drop in your organization.
14. Document Communication: In addition to patient and procedural documentation, make sure to document all your communications with the RAC, including dates, times, names of representatives, and the nature of the communication.
15. External Audit Support: Sometimes, it might be necessary to engage external auditors to do a comprehensive review of your documentation and coding processes. This can provide a different perspective and identify areas for improvement that you may have overlooked.
16. Establish Audit Policies and Procedures: Having well-documented policies and procedures can help make the audit process smoother and more efficient. These policies should include steps to take when an audit notification is received, responsibilities of team members, and timelines.
17. Track Audit Trends: Keep an eye on trends in RAC audits, both within your organization and in the broader healthcare industry. If certain types of claims or codes are often flagged in audits, you can proactively address these areas.
18. Engage with Professional Associations: Joining and participating in professional associations can provide valuable resources and support. These associations often provide updates on changes in regulations, best practices, and strategies to handle audits. They can also provide opportunities for networking and learning from others’ experiences.

RAC audit is a tool used by CMS to ensure the integrity of the Medicare program, and it’s not necessarily a negative event. It can provide valuable feedback and insights to improve your billing practices, reduce errors, and improve overall compliance. The best way to handle a RAC audit is to prevent billing errors proactively. Regular self-audits, staff training, and a robust compliance program can help you achieve this.

Some people believe that Recovery Auditors pursue overpayments primarily because they’re paid a contingency fee for what they recover.

Consequences of Errors and Wrongdoings

There can be other ramifications, including:

1. Repayment of Overpayments: If a RAC audit identifies overpayments, you will need to repay the overpaid amount. The Centers for Medicare and Medicaid Services (CMS) can recover the overpayment by deducting it from your future Medicare reimbursements or by requiring direct repayment.
2. Interest Charges: If you don’t repay identified overpayments promptly, CMS may charge interest on the overpayment.
3. Civil Monetary Penalties: In certain severe cases, such as instances of fraud or false claims, civil monetary penalties may be imposed. This is typically reserved for cases where the overpayment is due to deliberate false reporting, not coding or documentation errors.
4. Potential Criminal Penalties: In very severe cases involving fraud, criminal charges could be brought against the provider. This could potentially include fines and imprisonment, although these cases are relatively rare.
5. Reputational Damage: A RAC audit and the resulting penalties can cause reputational harm to a healthcare provider, which could impact patient trust and loyalty.
6. Exclusion from Medicare and Medicaid Programs: In the most severe cases, providers can be excluded from participating in Medicare and Medicaid programs.
7. Cost of Appeal: If you decide to appeal a RAC audit finding, the cost of legal and administrative support could be significant, although successful appeals can result in the reversal of the overpayment claim.
8. Increased Future Scrutiny: If issues are found during a RAC audit, it could lead to increased scrutiny and audits in the future, adding to the administrative burden for the provider.