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News in Several Major Topics


We want to call your attention to some new information and details that were presented in the conference call. This article discusses four topics that are important for all providers:


  • A “limited number” of Complex Reviews can begin without CMS approval
  • Providers are being encouraged to contact CMS project officers directly
  • RAC Web sites are beginning to appear (2 of 4)
  • The assurance that medical necessity guidelines, such as InterQual and Milliman, will be only guidelines for the RACs.


This last area is perhaps the most feared topic for providers, since even though the rules will be enforced by CMS, the RACs evidently will be making their own judgments about how to apply the rules when they are reviewing medical records, and specifically physician documentation.

Medical Necessity: Judgments vs. Guidelines


On the conference call, a caller asked what guidelines would be used by the RACs to determine medical necessity – a hot topic we have been writing a great deal about lately.


CMS, at least, was fairly clear in its answer to the question:


They said plainly, “…we want you to know that [those guidelines] can’t be used…to pay or deny a claim.”


They further stated that to judge medical necessity, RACs must abide by the same CMS policies and manuals, LCDs and NCDs, as those used now by the carriers, FIs and MACs. Nevertheless, the RACs can use whichever screening tool criteria they wish.


Frankly, this writer is not exactly sure what CMS meant by the comment that those guidelines can’t be used to pay or deny a claim. What, then, is used? Their answer, though straightforward, is not very reassuring.


We had heard during a recent conference that the RACs would judge medical necessity using the same screening criteria that hospitals were using. The comments from the conference call seemed to contradict our previous understanding.


What Will RACs Use?


CMS went even further on this call. The four RAC contractors all had representatives on the line: Diversified Collections Services (DCS) for Region A; CGI Federal (CGI) for Region B; Connolly Healthcare Services (CHS) for Region C; and Health Data Insights (HDI) for Region D.


CMS asked each of the representatives to talk about what their companies have decided to use, to date.


Here’s how they answered:

  • DCS – “…we have not yet decided between InterQual and Milliman.”
  • CGI – “…we will use whatever the FIs are using for the regions.” (InterQual)
  • HDI – “…we will use both InterQual and Milliman, but only as guidelines.”
  • CHS – “…we have not yet decided which to use, but we agree with the others – they will only be used as guidelines… [we will rely on] our own interpretation in working side by side with CMS.


So this situation exists exactly as many providers feared – RACs will be making judgment calls on medical necessity. At the very least, we’ve been assured that RACs will be using established and accepted industry guidelines in InterQual and/or Milliman.


It therefore behooves all providers to make sure that appropriate staff are well versed not only in how to use the available guidelines, but also how to make sure that documentation is sufficient to support physicians’ decisions.

Time Limits: A RAC Exception


Ordinarily, once a RAC receives a requested medical record for a complex review, it must conclude its review within 60 calendar days. A RAC, however, can be given an extension beyond this deadline to review a received medical record. It must get permission from CMS, but it can happen.


According to the statement of work (dated 11-05-2007), if the RAC gets permission from its CMS Project Officer, it must then notify the provider in writing (e-mail will suffice) and give some explanation of the situation. Once CMS allows the RAC to proceed, a notification of findings must be sent to the provider.


There is no telling how common this will be, but CMS reaffirmed on this call that it can happen.

Another Exception: Unapproved Complex Reviews


While discussing so-called “sample” requests – your facility may receive a request from a RAC for a “ten-claim sample” of some kind – CMS confirmed that a “limited number” of complex reviews can be conducted by a RAC even before CMS approves an issue.


When a RAC analyzes a set of sample claims, it must present its findings to CMS for approval of a new issue. CMS then has 60 days to review it and decide whether it is a legitimate issue. If CMS approves the issue, it is posted as a new vulnerability on the RAC Web site, and the RAC then begins widespread review.


If, however, CMS does not reach a decision within 60 days, to quote CMS from the call, “the RAC can issue a limited number of review result letters without CMS approval and Web noticing.

It is not clear from that statement what will happen. We will report here when we determine what CMS means by “a limited number” of review results letters, and also if that means that denials and demand letters also might be issued as a result of those findings. They did not elaborate on the call.


Unable to Clarify the Discussion Period


Unfortunately, we have not yet been able to reconcile our understanding of the discussion period, as previously reported in Part One. Our prior understanding is different from what was described by CMS on the conference call. Searches of the latest statement of work documents yielded no information but referred to the Program Integrity Manual (Chapter 3, Section 3.6.6, if you want to look it up yourself). The statements there only refer to a 15-day opportunity, not 40 days, and not an “undefined period,” as the speakers labeled it during the conference call.


We will continue to report on this important topic as we learn more. We are hoping to ask them directly at one of the upcoming outreach sessions. Regardless, the discussion period still represents an opportunity to kill a denial before recoupment can begin.


CMS Contact Encouraged


If you have any questions or problems with the RAC program, CMS suggested you e-mail them to this address: rac@cms.hhs.gov


Also, CMS actually gave out names and contact numbers for the four RAC project officers – each is responsible for a specific RAC Region – and even encouraged providers to call them directly:


  • Region A:        Ebony Brandon           410-786-1585
  • Region B:        Scott Wakefield          410-786-4301
  • Region C:        Amy Reese                  410-786-8627
  • Region D:        Kathleen Wallace        410-786-1534


RAC Contractor Web sites


The RACs themselves are required to have Web sites running to further enable an interface with providers, as per the RAC Statement of Work (SOW). At the time of the conference call, two of the contractors had RAC-specific Web sites available, and the other two promised to have theirs up shortly.


Here are the contractors and their Web sites by Region:


  • Region A (ME, NH, VT, MA, RI, NY, NJ, PA, DE, MD) – http://www.dcsrac.com – Diversified Collection Services.
  • Region B (MN, WI, MI, IL, IN, OH, KY)
    http://racb.cgi.com – CGI Federal, CGI Technology & Solutions.
  • Region C (CO, NM, OK, TX, AR, LA, MS, AL, TN, GA, FL, SC, NC, VA, WV)  — no specific site yet, but you can contact them via http://www.connollyhealthcare.com – Connolly Healthcare Services.
  • Region D (AK, HI, CA, WA, OR, NV, ID, MT, WY, UT, AZ) – no specific site yet, but you can email them at racinfo@emailhdi.com – Health Data Insights.

Education: Preparing for RAC Audits


The defense we suggest in preparing for the RACs is to educate, educate, educate. Let us take a moment here to talk about HOW to educate your staff in a way that is not only cost-effective but has continuing value beyond the moment that you sign that purchase order.


RAC University has a complete system of online education that keeps you updated. While you may be tempted to buy slightly less expensive courses available on CDs, you need to consider one fact: the guidelines and some of the rules keep changing.


The Advantage of Online Education


When you buy a CD and install it on your servers or work stations, you only have a moment-in-time snapshot of what the rules are.


The advantage of the online courses offered by RAC University is that they get updated on a continual basis by eduTrax®. Subscribing to these online courses ensures that you will have the latest information and updates during the life of your subscriptions. CDs contain information that is obsolete within months, if not weeks. RAC University online courses are never obsolete.


Therefore, we highly encourage our readers to beef up on their education and training, especially concerning medical necessity and its documentation. Sign up for the courses in RAC University, particularly the special offer, our most popular package, covering the main topics needed for correctly coding and documenting to support optimum reimbursements.


Upcoming LIVE Webinar


Register NOW for our upcoming LIVE Webinar –


Protect Reimbursement from the RACs:

How to Avoid Medical Necessity Errors for Cardiac Service 1-Day Stays

Click HERE to Sign up  or  click HERE to see the full description from the email, as a web page.



Let RAC Monitor and RAC University, powered by eduTrax®, help prepare you and your staff to weather the coming storms that are the RACs.


If you follow the rules, the rules will protect your reimbursements. The rules can change, of course, but that’s why we created RAC Monitor and RAC University, powered by eduTrax®… to keep you informed.



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