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Medicare RAC Program Improvements Delayed Until 2016

The Centers for Medicare and Medicaid Services (CMS) had planned to award new contracts to companies that act as Medicare’s recovery audit contractors (now referred to as recovery auditors) (RAs) for operation of the Medicare recovery audit program by the end of 2014, which would have concluded the procurement process for new contracts that began in May, 2013. However, in a move all-too-familiar with providers, CMS announced recently that due to continued delays in awarding the new contracts, the existing contracts for the four private companies that act as Medicare’s RAs would be extended through 2015 (CGI Federal, Connolly, HealthDataInsights and Performant Recovery). Among the new contracts delayed due to a post-award protest was the contract awarded December 30, 2014, to Connolly, LLC for DME and Home Health and Hospice providers. In addition, CMS modified the existing RA contracts to allow the existing Medicare RAs to restart certain reviews that had stopped in 2014 pursuant to the old contracts’ terms, and to extend their work with CMS through April, 2017, to finalize all appeals and reconciliation.

Unfortunately, the contract extensions and modifications granted by CMS further delays its own efforts to usher in the next phase of the recovery audit program, and leaves providers waiting for long promised and much needed program improvements for at least another year. Looking ahead to the next phase of the recovery audit program, we have highlighted some of the program changes on page 3 that were published by CMS after evaluation of the many concerns raised about the existing program. The new requirements will be incorporated into all new RA contract awards, making them effective for any RA activities performed under new contracts entered into on or after December 30, 2014.

Reducing Provider Burden
Provider Concern​

Additional documentation request (ADR) limits are the same for all providers of similar size and are not adjusted based on a provider’s compliance with Medicare rules.

ADR limits are based on an entire facility, without regard to the differences in departments within the facility. Providers who are not familiar with the Recovery Audit Program (RAP) immediately receive requests for the maximum number of medical records allowed.​
Providers must wait 60 days before being notified of the outcome of their complex reviews.
Upon notification of an appeal by a provider, the RA is required to stop the discussion period.​ Enhancing Program Oversight CMS​ ​
​Provider Concern​ ​ RAs focused much of their resources on inpatient hospital claims.​ RAs are not penalized for high appeal overturn rates.​ Providers are concerned with the accuracy of RA automated reviews and RAs are not penalized for low accuracy rates.​ Increasing Program Transparency​ ​
​​Provider Concern​ ​ Providers are unsure of who to contact when they have complaints/concerns about the RAP.​ Providers are unclear about the information in the RA new issue website postings.​
​Benefit to Providers
​CMS will establish ADR limits based on a provider’s compliance with Medicare rules. Providers with low denial rates will have lower ADR limits while providers with high denial rates will have higher ADR limits. The ADR limits will be adjusted as a provider’s denial rate decreases, ensuring the providers that comply with Medicare rules have less Recovery Audit (Audit) reviews.
​ADR limits are based on an entire facility, without regard to the differences in departments within the facility. CMS-established ADR limits will be diversified across all claim types of a facility (e.g. inpatient, outpatient).  This ensures that a provider with multiple claim types is not disproportionately impacted by Audit review in one claim type vs. another (e.g. all of a provider’s inpatient rehabilitation claims reviewed or all inpatient).
​CMS-established ADR limits will include instructions to incrementally apply the limits to new providers under review. This will ensure that a new provider is able to respond to the request timely considering staffing levels at the time.
​Recovery Auditors (RAs) will have 30 days to complete complex reviews and notify a provider of their findings. This provides more immediate feedback to the provider.
​RAs will not receive a contingency fee until after the second level of appeal is exhausted. Previously, RAs were paid immediately upon denial and recoupment of the claim. This delay in payment helps assure providers that the decision made by the RA was correct. Note: if claims are overturned on appeal, providers are paid interest calculated from the date of recoupment.
Benefit to Providers
​CMS will require the RAs to broaden their review topics to include all claim and provider types, and will be required to review certain topics based on a referral, such as an OIG report.
​RAs will be required to maintain an overturn rate of less than 10% at the first level of appeal, excluding claims that were denied due to no or insufficient documentation or claims that were corrected during the appeal process. Failure to do so will result in CMS placing the RA on a corrective action plan, that could include decreasing the ADR limits, or ceasing certain reviews until the problem is corrected.
​RAs will be required to maintain an accuracy rate of at least 95%. Failure to maintain an accuracy rate of 95% will result in a progressive reduction in ADR limits. CMS will continue to use a validation contractor to assess RA identifications and will improve the new issue review process to help ensure the accuracy of RA automated reviews.
​​Benefit to Providers
​CMS established a Provider Relations Coordinator to offer more efficient resolutions to affected providers.  This position gives providers a name and contact information when issues arise that cannot be solved by having discussions with the RA.
​CMS will require the RAs to provide consistent and more detailed review information concerning new issues to their websites.

Even after the new contracts incorporating these improvements are effective and begin to have an impact, past practices and trends with the recovery audit program are a good indicator that certain areas will continue to receive special attention by the RAs. Providers should closely monitor sources that reveal those trends and continue to focus on your facilities’ practices which have previously been considered high risk areas by the RAs.  These practices should be viewed as essential to your provider action plans to avoid being targeted and to ensure an effective response if you are audited. Whether your facilities are analyzing regulatory requirements and changes, reviewing compliance policies and procedures, formulating best practices, or making an assessment of any rights and duties or response plan post-audit notice, involvement of experienced legal counsel should be considered as an important resource.

© 2020 Poyner Spruill LLP. All rights reserved.National Law Review, Volume V, Number 58
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