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As was been reported on November 4, 2008, CMS delayed the program’s implementation due to a protest filed by two vendors (PRG Schultz USA, Inc. and Viant, Inc.) who were not selected as part of the national, permanent RAC program. The Bid Protest Hearing Dates are scheduled for February 9, 2009 and February 11, 2009.


In the meantime, healthcare providers have the opportunity to prepare for RAC’s arrival. We know that the RAC process impacts all aspects of daily operations including but not limited to release of information, remittance advice reconciliation, and account auditing and appeals. CMS suggests that healthcare providers should consider the following:


  • Conducting an internal assessment to ensure that submitted claims meet Medicare rules.
  • Identifying where improper payments have been persistent by reviewing the RACs’ Websites and identifying any patterns of denied claims within their own practice or facility.
  • Implementing procedures to promptly respond to RAC requests for medical records.
  • Keeping track of denied claims and correcting these previous errors.
  • Determining what corrective actions need to be taken to ensure compliance with Medicare’s requirements and to avoid submitting incorrect claims in the future.
  • Filing an appeal before the 120-day deadline if the provider disagrees with the RAC determination.


Even though the prep is painful (as it is with most invasive procedures) Hirschl and Associates strongly recommends that providers use this time to deploy the organization, assess and mitigate risk, and develop strategic plans for performance improvements. Demonstration program results can guide us in our strategic RAC readiness plans.


In this first of a series of RAC related articles let’s focus on deploying your organization. Results of the RAC demonstration program indicate that CMS recouped 8 percent ($74.3 million) due to lack of receipt of medical records (entire records and incomplete records).  Lessons learned from the demonstration program indicate that hospitals need to undertake the following:


  • Inform the RAC of your organization’s RAC liaison to ensure that request letters are received and processed in an efficient and timely manner.
  • Assess staffing needs to ensure that medical records are retrievable and that RAC receives all documents within the 45-day turn around time frame. Whether your organization performs release of information internally or outsources the function, ensure that you will be able to handle the maximum RAC record request of no more than 200 records in a 45-day period for both inpatient and outpatient claims combined. Remember that the RAC generates a technical denial (i.e., retraction of entire original DRG payment) when requested medical records are not received within the 45-day timeframe.
  • Track the medical record request process using an AHA compatible RAC tracking database. Hospitals should track dates of requests, shipping information, and receipt of medical records by the RAC. Your organization need not feel the pain of preventable technical denials.


In our next article we will address RAC data mining, risk assessment and mitigation initiatives. For now take the opportunity to get your house in order, ready for RAC’s arrival.


Nancy Hirschl is President and CEO of Hirschl and Associates

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