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Providers beginning the “RAC Race” at the end of the line are wondering, “Will there be any water left at the mile markers for those of us just beginning the race?” The first five years of what was originally known as the permanent Recovery Audit Contractor (RAC) program is coming to a slow, but perhaps not so steady, close.

New proposals have been submitted for the 2014 permanent Recovery Auditor program, with CMS proposing changes in the geographical regions as well as new contractor configuration to include a single recovery auditor for home health and hospice. Some contractors have slowed down ADR requests, much to the pleasure of hospitals that have been inundated with the maximum number of medical records requests every 45 days. Particularly relieved are those providers hoping for “favored nation” status—consistently passing RAC reviews with no findings. 

While hospitals are looking forward to the slowing RAC administrative burden over the next several months, other providers are just reaching the starting line, hoping that there are helpers along the route on the race to the end of the first five years. 

Outpatient therapy providers were actually subject to one of the first RAC published issues: an automated reviewed of untimed codes billed in excess of one unit. With a few hiccups on the interpretation of CMS coding and billing instructions and corrections of their edits, all four RACs have been silent on outpatient therapy—probably due to the fact that in private practice the average claim (date of service) is about $100. With a 10 percent bounty, for example, the RAC review will net $10 if there is a reason to deny the claim. Now therapy providers find themselves crossing the starting line of RAC reviews when other providers are crossing the first-year finish line.

CMS Turns over ATRA Law Mandates to the Recovery Auditors

The American Taxpayer Relief Act (ATRA) mandated a prepayment manual medical review of therapy claims over the $3,700 threshold. The Medicare Administrative Contractors (MACs) were charged with the review for all claims received on or before March 31, 2013. For claims received on or after April 1, 2013, the manual medical review will be conducted by the RACs. In the 11 RAC Prepayment Review Demonstration States, therapy reviews will be conducted on a prepayment basis. Post-payment reviews will take place in the remaining states. This special program is not subject to the ADR slowdown; in fact, more providers are approaching the starting line as Medicare beneficiaries exceed the $3,700 therapy threshold-triggering mandatory RAC medical necessity audits.

When the permanent RAC program rolled out nearly five years ago, there were numerous outreach sessions conducted as part of the Statement of Work (SOW). The RAC and CMS worked with hospital associations, physician groups, and other entities to provide webinars as well as onsite sessions explaining the program. Of course, experience has been the best educator when looking in the rearview mirror, as the RACs started with automated reviews, progressed to DRG validations, moved on to medical necessity reviews, and added semi-automated reviews. The Statement of Work has been updated, the maximum medical records that could be requested have changed, and reimbursement for medical record copy/preparation was capped. CMS also rolled out several demonstration programs during this time frame. 

Therapy and other providers who are new to the program with ADR requests don’t know where to start.  If they attended any of the original outreach session, the information is old and outdated; if they are searching on the web, it may be difficult to sort fact from fiction.  

RAC Review – But Caution on the RAC Rules

Perhaps the most confusing thing of all for therapy providers under manual medical review is differentiating it from the normal RAC process. The manual medical review process is a special program assigned to the RACs, and many of the normal RAC rules do not apply:

  • Medical record ADR limits do not apply: Manual medical review is 100 percent of all claims where a $3,700 therapy threshold has been reached.
  • Medical records reimbursement does not apply: Reimbursement for medical records preparation costs (up to $25 max per ADR) does not apply in the RAC prepayment demonstration program.
  • ADR slowdown does not apply: Manual medical review is mandated by law through Dec. 31, 2013, and is likely to be renewed.
  • The discussion period is not available in prepayment review: A chance to begin a formal dialog with the RAC over an ADR request is not available in prepayment review states. However, it is available in for post-payment review.

Best Practice: Getting Started at the End of the Line

As you ready for your first inevitable RAC medical necessity review, there are some things we have learned from the RAC runners at the beginning of the line:

  1. Assemble a RAC response team. Time is of the essence both in terms of ADR response and stopping recoupment if you plan to appeal findings.
  2. Bookmark your regional recovery auditor’s website and have a team member assemble all the posted issues, particularly noting the CMS regulations and statutory citations.
  3. Reach out and touch your RAC with a call to customer service to get assistance in navigating their website, registering for their provider portal, and asking for any tips they care to offer.
  4. Scrapbook your way to successby assembling relevant CMS documentation and program requirements, including local coverage determinations. 
  5. Don’t let the dogs get your fax—strongly consider using an esMD vendor to electronically submit/upload information. It is too easy to have a denial based upon faxes not received or certified mail being lost. If it’s late, it doesn’t matter how may fax receipts you produce!
  6. Get Your John Hancocks in order and be sure to meet the CMS signature requirements for both referral and documentation requirements.
  7. Validate correct use of any ABN to ensure that if you intended to transfer liability to the beneficiary, it was done properly, with the 2013 ABN rules for therapy over the cap and transference of liability.
  8. Actively participate in professional groups—the therapy industry has not had to respond to the RACs, and may find its ability to influence issues and concerns with the process limited as a small solo provider. Join your professional association and make your concerns known. The American Hospital Association, to its credit, has opened up its RAC-TRAC report to even non-members, so that the industry as a whole could respond and participate from the provider viewpoint. 

About the Author

Nancy Beckley, senior correspondent for RACmonitor, is the president of Nancy Beckley & Associates LLC, is certified in healthcare compliance and has extensive experience specializing in rehabilitation and compliance. Her work includes establishing auditing and monitoring protocols for outpatient providers; conducting pre-acquisition compliance risk audits; strategic market-based planning and analysis; operational analysis, including benchmarking, coding and staffing; CORF development and implementation; managed care analysis; facilitation of credentialing, and managed care contract technical review.

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Nancy J. Beckley, MB, MBA, CHC

Nancy Beckley is founder and president of Nancy Beckley & Associates LLC, providing compliance planning and outsourced compliance services to rehab providers in hospitals, rehab agencies, and private practices. Nancy is certified in healthcare compliance by the Healthcare Compliance Certification Board. She is on the board of the National Association of Rehabilitation Providers and Agencies. She previously served on the CMS Professional Expert Technical Panel for Comprehensive Outpatient Rehabilitation Facilities. Nancy is a familiar voice on Monitor Mondays, where she serves as a senior national correspondent.

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