How to Defend Against Alleged Overpayment

How to Defend Against Alleged Overpayment

Recovery Audit Contractor (RAC) audits were first introduced in 2005, peaked around 2010, and experienced a slowdown during COVID-19. In 2006, Congress authorized the Centers for Medicare & Medicaid Services (CMS) to initiate the RAC program in three states: New York, Florida, and California.

Audits originally focused on detecting incorrect coding, duplicated services, fraud, and more. Arizona, Massachusetts, and South Carolina were added to the project in 2007, and Congress expanded the RAC program nationwide in 2010.

We all know about the problems.

When the RAC program was rolled out nationwide, it presented three key challenges that providers found difficult to overcome:

  1. Overly aggressive RACs: RAC audit fees were (and still are) paid out by the Centers for Medicare & Medicaid Services (CMS) on a contingency fee basis, meaning the more dollars they denied and “recovered,” the higher the fees they collected. This model essentially incentivizes RACs to be aggressive in their audit approach, especially with regard to hospitals with high-value claims.
  2. More paperwork, less time: Most providers were not prepared for the onslaught of medical record requests and often sustained denials, simply because they were not able to respond and submit records on time.
  3. Overwhelmed appeals process: Over a short period of time, the Medicare appeals process became overwhelmed with provider claims at all levels. Appeals response became extremely slow.

With all these issues causing providers grief in the RAC audit process, change was inevitable, and RAC audits began to slow. There are conflicting anecdotes and explanations as to why, but whatever the case, CMS noticeably backed down in terms of RAC audit frequency and document requests in the mid-2010s. They ramped up again once they deemed themselves fixed. Are they fixed?

When RAC audits were introduced, providers received an unmanageable volume of audit requests from payors. Now, changes have supposedly led to fewer audits and less paperwork, giving hospitals the opportunity to focus more broadly on all types of payor audits. If that’s the truth, don’t ask my clients.

But still, every year, review contractors issue an estimated 2 million requests to healthcare providers for medical documentation and records. All too often, these requests are fulfilled through cumbersome manual processes. The sheer volume of activity reveals workflow gaps and inefficiencies in a process that can be up to 90 percent manual, and at risk for data quality issues.

These inefficiencies are only exacerbated by tightening labor markets and a shortage of team members in hospital finance departments nationwide. With fewer people doing the same amount of work, teams are prone to error.

CMS re-launched the RAC audit program in 2018 with new rules and guidelines for audits. The biggest changes included:

  • Reduction in the number of documents a RAC could request in a certain time frame. This meant fewer audits with fewer document requests per audit.
  • Increase in CMS’s willingness to engage in mass settlements. The backlog in the appeals process became so overwhelming that CMS began to settle appeals more often to save time.

With these key changes in place, RAC audits started back up with a bit less chaos. These audits ran as usual before pausing in March 2020 as a result of the declaration of a national health emergency due to the COVID-19 pandemic. After a brief break, RAC audits began again in August 2020 and continue today.

Today, we are where we are. RACs are not as intrusive as in 2006. But they are still intrusive. Being audited is a hassle, to say the least. RACs are not paid 13.5-percent contingency fees until the appeals process is concluded.

Print Friendly, PDF & Email
Facebook
Twitter
LinkedIn

Knicole C. Emanuel Esq.

For more than 20 years, Knicole has maintained a health care litigation practice, concentrating on Medicare and Medicaid litigation, health care regulatory compliance, administrative law and regulatory law. Knicole has tried over 2,000 administrative cases in over 30 states and has appeared before multiple states’ medical boards. She has successfully obtained federal injunctions in numerous states, which allowed health care providers to remain in business despite the state or federal laws allegations of health care fraud, abhorrent billings, and data mining. Across the country, Knicole frequently lectures on health care law, the impact of the Affordable Care Act and regulatory compliance for providers, including physicians, home health and hospice, dentists, chiropractors, hospitals and durable medical equipment providers. Knicole is partner at Nelson Mullins and a member of the RACmonitor editorial board and a popular panelist on Monitor Monday.

Related Stories

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

Leveraging the CERT: A New Coding and Billing Risk Assessment Plan

Leveraging the CERT: A New Coding and Billing Risk Assessment Plan

Frank Cohen shows you how to leverage the Comprehensive Error Rate Testing Program (CERT) to create your own internal coding and billing risk assessment plan, including granular identification of risk areas and prioritizing audit tasks and functions resulting in decreased claim submission errors, reduced risk of audit-related damages, and a smoother, more efficient reimbursement process from Medicare.

April 9, 2024
2024 Observation Services Billing: How to Get It Right

2024 Observation Services Billing: How to Get It Right

Dr. Ronald Hirsch presents an essential “A to Z” review of Observation, including proper use for Medicare, Medicare Advantage, and commercial payers. He addresses the correct use of Observation in medical patients and surgical patients, and how to deal with the billing of unnecessary Observation services, professional fee billing, and more.

March 21, 2024
Top-10 Compliance Risk Areas for Hospitals & Physicians in 2024: Get Ahead of Federal Audit Targets

Top-10 Compliance Risk Areas for Hospitals & Physicians in 2024: Get Ahead of Federal Audit Targets

Explore the top-10 federal audit targets for 2024 in our webcast, “Top-10 Compliance Risk Areas for Hospitals & Physicians in 2024: Get Ahead of Federal Audit Targets,” featuring Certified Compliance Officer Michael G. Calahan, PA, MBA. Gain insights and best practices to proactively address risks, enhance compliance, and ensure financial well-being for your healthcare facility or practice. Join us for a comprehensive guide to successfully navigating the federal audit landscape.

February 22, 2024
Mastering Healthcare Refunds: Navigating Compliance with Confidence

Mastering Healthcare Refunds: Navigating Compliance with Confidence

Join healthcare attorney David Glaser, as he debunks refund myths, clarifies compliance essentials, and empowers healthcare professionals to safeguard facility finances. Uncover the secrets behind when to refund and why it matters. Don’t miss this crucial insight into strategic refund management.

February 29, 2024
2024 SDoH Update: Navigating Coding and Screening Assessment

2024 SDoH Update: Navigating Coding and Screening Assessment

Dive deep into the world of Social Determinants of Health (SDoH) coding with our comprehensive webcast. Explore the latest OPPS codes for 2024, understand SDoH assessments, and discover effective strategies for integrating coding seamlessly into healthcare practices. Gain invaluable insights and practical knowledge to navigate the complexities of SDoH coding confidently. Join us to unlock the potential of coding in promoting holistic patient care.

May 22, 2024
2024 ICD-10-CM/PCS Coding Clinic Update Webcast Series

2024 ICD-10-CM/PCS Coding Clinic Update Webcast Series

HIM coding expert, Kay Piper, RHIA, CDIP, CCS, reviews the guidance and updates coders and CDIs on important information in each of the AHA’s 2024 ICD-10-CM/PCS Quarterly Coding Clinics in easy-to-access on-demand webcasts, available shortly after each official publication.

April 15, 2024

Trending News

Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →

Happy World Health Day! Our exclusive webcast, ‘2024 SDoH Update: Navigating Coding and Screening Assessment,’  is just $99 for a limited time! Use code WorldHealth24 at checkout.

SPRING INTO SAVINGS! Get 21% OFF during our exclusive two-day sale starting 3/21/2024. Use SPRING24 at checkout to claim this offer. Click here to learn more →