CMS' Recovery Audit Contractor Program Update

CMS completed its limited pilot of the Recovery Audit Contractor (RAC) program in March, and based on its success at collecting Medicare overpayments from providers, the RAC initiative will be taken nationwide beginning in 2009.

Sheri Poe Bernard, CPC, CPC-H, CPC-P

The RAC program, created in 2004 to safeguard the Medicare Trust Fund, identifies Medicare and Medicaid overpayments and requests repayments from hospitals, physician practices, and DME providers. A demonstration project has been operating for 3 years in Arizona, California, Florida, Massachusetts, New York, and South Carolina. During fiscal year 2007 (October 1, 2006, to September 31, 2007), RAC teams recovered $357.2 million in overpayments for the six states.

CMS announced in March that the RAC program will "gradually expand" beginning as early as January 2009, and will be operational nationwide a year later. CMS expects to name four regional RACs this spring. These RACs will be private companies equipped with proprietary Medicare edit systems. The contractors earn a percentage of collected refunds. The cost of the pilot program is 22 cents for each dollar returned to the Medicare program.

The only states exempt from participation will be those undergoing a Medicare Administrative Contractor (MAC) transition, and those will be exempt only during the transition period. RAC differs significantly from the Comprehensive Error Rate Testing (CERT) program of Medicare. In CERT, the work of Medicare contractors is evaluated for their ability to detect errors. CERT evaluates program performance while RAC evaluates individual provider compliance. First implemented in 2003, CERT will continue to operate as a parallel program as RAC ramps up.

During the pilot program, almost half of the reimbursements were the result of incorrect coding. The RAC runs filed Medicare claims through its system, identifies errors, and sends a request to the provider for a photocopy of the entire medical record for the encounter in question. Providers should not redact the requested records, as RACs are authorized by CMS to view this information. A response to the RAC request must be delivered within 45 days. The RAC has 60 days to review the record and notify the provider of the outcome of the review.

How should radiologists prepare for RAC reviews? Here's a summary of how to ready your practice for an audit.

Know your situation. Perform your own retrospective audit. RACs can go back as much as 3 years and will begin in 2009, so encounters as far back as 2006 may be audited.

Educate your team about RAC. Who opens your mail? If a letter from RAC isn't immediately identified and prioritized, time could be wasted in generating a response. Everyone from the front desk to the back office should be aware of the RAC program so your response to a query is timely and appropriate.

Use certified professional coders in your office. CMS is requiring RACs to employ certified professional coders. If you aren't using certified coders, you may want to consider hiring some, or certifying those you have. Certified coders can talk peer-to-peer, and you'll want to use every advantage you can during an audit. The other plus of certified coders is the knowledge and professionalism they will bring to your office.

Study the 2008 OIG Workplan. Many of the targets for RACs are taken directly from the OIG workplan (available online: www.oig.hhs.gov/publications/~Work_Plan_FY_2008.pdf). Others are taken from the RAC results from the pilot project. Some of the issues targeting radiologists include:

• Unbundling of procedures. Keep current with the National Correct Coding Initiative to ensure your office isn't billing for more procedures than is appropriate. For example, for bilateral angiography of the cervical carotid, the appropriate CPT code would be a bilateral code, 75680. This could be unbundled, and reimbursed inappropriately at a higher rate, by reporting the unilateral procedure, 75676, twice.
• "Incident to" services provided by nonphysician practitioners. Medicare has very specific rules regarding reporting services provided by physician assistants or nurse practitioners. For example, a PA or NP cannot perform new patient services for a physician.
• Medical necessity. Ensure that your services meet the medical necessity edits found in the National Coverage Decisions found on the Medicare Web site. Furthermore, ensure that the diagnosis is adequately documented in your medical record for the patient.
• Place of service codes. If you perform services in an ambulatory surgical center (ASC) or outpatient hospital, ensure that you are reporting the correct place of service code for these surgeries. If you reported these surgeries with the code for your own office rather than an ASC or outpatient hospital, you were overpaid for the services.
• Units of service. From x-ray services to radiopharmaceutical injections, ensure that the correct unit number is reported in the claim.

Sheri Poe Bernard, CPC, CPC-H, CPC-P, is vice president of member relations at the American Academy of Professional Coders (AAPC), the nation's largest education and credentialing association for medical coders. AAPC provides certified credentials to medical coders in physician offices, hospitals, and outpatient centers. The three certifications AAPC offers are CPC, CPC-H, and CPC-P and represent the gold standard certification for medical coding.