Healthcare News & Insights

CMS updates audit guidelines for RACs

For hospitals looking for news about future audits from the feds, the Centers for Medicare & Medicaid Services (CMS) has released new details about its Recovery Audit Contractor (RAC) program.

479051631 (1)The agency has proposed several updates to the RAC program that will make it easier for hospitals to stay in compliance with federal guidelines – and give them more opportunities for recourse against RAC reviews that uncover payment issues.

2 crucial updates

One key change that may give hospitals some breathing room: Instead of placing most of their focus on inpatient hospital claims, RACs will broaden their reviews to look at all types of claims and providers.

Another important change helps hospitals avoid losing out on reimbursement due to timing issues with audits.

To meet CMS’ timely filing requirements, hospitals must submit claims within a year of service. This posed a problem with RACs because the auditors could go back three years for patient status reviews. So if a RAC found an issue on an older claim and retroactively denied it, a hospital would not be able to rebill the service.

Now, under the new guidelines, if hospitals submit their initial claims within three months of the date of service, CMS will limit the auditor lookback period for patient status reviews to six months from the date of service. This gives facilities the chance to rebill denials and still stay within the one-year time frame.

Quicker reviews

Hospitals and providers will also receive faster results from the auditing process.

Under the old RAC program, there was a 60-day waiting period before learning the outcome of complex reviews. But with the changes, auditors must complete complex reviews within 30 days so facilities and providers can receive immediate feedback on their results.

CMS is also trying to ease the administrative burden on hospitals and providers facing RAC audits by changing its limits for additional documentation requests.

Previously, they were based on the claims submitted by a facility as a whole. Now, CMS will narrow the scope to departments or types of claims submitted only. This means facilities won’t have to do as much legwork to track down years’ worth of claims from different areas.

Getting in touch

Other changes will improve communication between RACs and healthcare providers.

RACs must now confirm that they’ve received discussion requests or written correspondence from providers within three business days. And CMS has created a Provider Relations Coordinator to act as a liaison between healthcare providers and auditors in case of questions or disputes.

These changes will be effective for all new RAC contracts. Currently, CMS has put new contracts on hold because of a lawsuit from one of the RACs about proposed changes to the payment methodology, as discussed in an article from FierceHealthcare. New contracts will be assigned once the case is settled.

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