Healthcare News & Insights

What’s next for the RAC program?

The Recovery Audit Contractor (RAC) program is picking up speed again. But this time around, there are changes to give hospitals a break. 

142027986Providers will remember that the Centers for Medicare & Medicaid Services (CMS) put the program on hold last year.

At the time, CMS was dealing with a massive backlog of appeals, and a lawsuit about awarding new RAC contracts, which slowed operations down severely. The backlog was so bad, CMS offered many hospitals a buy-out, saying they could collect a portion of what their claims were worth if they agreed to drop their appeal.

Now it looks like the agency is revamping the program to prevent appeals from piling up again.

Program improvements

CMS recently announced its first new RAC contract with Connolly LLC, which will focus on investigating improper payments for claims by durable medical equipment suppliers, and home health and hospice providers — two areas which have recently come under heavy scrutiny for abuse.

However, the good news is the list of changes CMS is making to all RAC contracts going forward.

The new provisions are meant to increase program transparency and lighten the administrative burden put on providers, for example:

  • Setting limits on additional documentation requests (ADRs) based on providers’ compliance. Providers with low denial rates will have a lower limit set on ADRs, and vice versa.
  • Diversifying ADRs to better reflect providers’ claims mix to provide a more rounded view of compliance and prevent hospitals from being negatively impacted by narrow audits on only one kind of claim.
  • Reducing the RAC look back period to 6 months from the date of the service for claims filled within three months of the care.
  • Not increasing the ADR limit for providers in areas with new RAC contracts, and
  • Imposing a 30-day limit on RACs to complete complex reviews and report results to providers to ensure they receive determinations in a timely manner.

Delayed implementation

Unfortunately, CMS also clarified that these changes will only apply to new RAC contracts. That means the new terms likely won’t apply to the old RACs, whose contracts were extended until 2016.

In the meantime, hospitals should continue to devote resources to compliance to avoid lengthy RAC audits and appeals later. Prevention steps like documenting regular self-audits will help show your hospital’s is serious about avoiding wrong-doing in the event a RAC comes knocking.

It’s also important hospitals take measures to ensure claim overpayments are identified and returned. Under the health reform law, overpayments that aren’t reported in a timely manner may also violate the False Claims Act and attract unwanted scrutiny from CMS.

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