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The concern is that the RAC is “sandbagging” the record in order to wait for a more “lucrative” cause for denial. While this may seem improper, the guidelines outlined in the RAC Statement of Work (SOW) appear to actually require the RAC to withhold a review results letter if a subsequent review is performed on the same claim.


Denials without Demands


Anyone familiar with the RAC program knows that once a RAC sends a request to a provider for medical records, the provider has just 45 days to deliver said records to the RAC. (Failure to deliver the records is cause for a complete denial of the claim and subsequent recoupment of the entire reimbursement.) If the provider delivers the records, the RAC then has 60 days to complete the review of the claim and submit a letter to the provider listing the review findings, including a detailed description of the Medicare policy or rule that was violated and a statement as to whether the violation resulted in an improper payment. In the case of an overpayment, the RAC next notifies the appropriate Fiscal Intermediary/Medicare Administrative Contractor (FI/MAC) and the process of recoupment begins.


Medicare uses recoupment to recover the majority of provider overpayments. It is a well-defined process, reducing present and/or future Medicare provider payments and then applying those amounts toward the debt. Providers are notified via a demand letter indicating the amount that is owed.


In the cases I refer to above, however, no demand letters were sent to the providers. Instead, they received notices that the RAC was “rescinding” either or both the record requests and the record review. According to those providers, no further explanations were provided by the RAC or the MAC.


Two Questions


When I was first told of this I did wonder two things: first, is the RAC allowed to do this; and second, why would the RAC do this?


Question #1: Is This Allowed?


The first thing to answer is really about whether the RAC can do multiple reviews on the same claim. If the RAC is not allowed to do so, then this would provide a good answer to the second question.


If the RAC is only allowed to file a single denial for a claim, but is able to document more than one reason for denial, then the RAC would be smart to use whichever denial would produce the largest fee for the RAC.


However, there is no limitation in the SOW on how many times the RAC may review any claim. In fact, the SOW even provides guidance for what the RAC should do in the case of multiple reviews for a single claim.


In the SOW under Section F, Activities Following Review, paragraph 3, Communications with Providers about Improper Payment Cases, the RAC is instructed that it may send the provider only one review results per claim. However, later in the same paragraph, there is conflicting instruction. Here is the paragraph with the conflicting statements in bold:


“The RAC may send the provider only one review results per claim.  For example, a RAC may NOT send the provider a letter on January 10 containing the results of a medical necessity review and send a separate letter on January 20 containing the results of the correct coding review for the same claim.  Instead, the RAC must wait until January 20 to inform the provider of the results of both reviews in the same letter.  It is acceptable to send one notification letter that contains a list of all the claims denied for the same reason (i.e. all claims denied because the wrong number of units were billed for a particular drug).  In situations in which the RAC identifies two different reasons for a denial, a letter should be sent for each reason identified. For example, if the RAC identified a problem with the coding of respiratory failure and denied several claim(s) because the wrong procedure code and wrong diagnosis codes were billed, the RAC should send two separate letters.  The first letter should list all claims in which an improper payment was identified that contained the wrong procedure code and the second letter should identify those denied because the wrong diagnosis code was billed.” RAC SOW pp 21, f.


The language is difficult and we have asked for some clarification from CMS.



Meanwhile, despite the contradictory statements there are two things we can know for sure.


1.   The RAC is certainly allowed to perform multiple reviews per claim.

2.   If the RAC reviews a claim more than once, the results of reviews for that claim should be sent out at the same time even if it means delaying the delivery of the earlier review.


Based on these two facts, there would seem to be no reason for a RAC to “sandbag” a review, waiting for a later, more profitable denial. If the RAC has two reasons for denial, it is simply instructed to deliver the results at the same time. Therefore, there would be no need to “rescind” a review results letter (according to my interpretation of the above instructions).


So, why rescind?


Question Two: Why would the RAC rescind a Review?


My first thought about why a RAC would rescind a review concerned something I remembered from earlier readings of the SOW – the RAC would not be allowed to review a claim already under review.


In an effort to “minimize the impact on the provider community,” CMS included in the RAC program a system to prevent “overlap” – the RAC Data Warehouse, which holds all the data made available to the RACs by CMS.  The warehouse includes a list of all claims being reviewed by any other government entity (a Medicare contractor, a MAC or law enforcement).


Exclusion: Claims that are Off-Limits for RACs


Claims being reviewed by another entity are considered “excluded” claims and include those originally denied and later paid on appeal. Exclusions are permanent, but only refer to claims, not providers. Once a claim is excluded, it will never again be available for a RAC to review. (See SOW, pp. 9, f.)


This would seem, therefore, to be a good reason to rescind a review: the RAC may be adding another review result for the same claim.


If a claim has an MS-DRG that has been approved for both DRG Validation and Medical Necessity review, then perhaps this makes sense. However, if a claim’s MS-DRG is only approved for DRG Validation, then this may not apply. In such a case, where only one issue is approved for review for that MS-DRG, there may be a more ominous reason for the RAC to rescind the review: could it be that law enforcement has gotten involved?


Suppression: Claims and Providers Off-Limits for RACs


Both claims and providers may be under investigation by law enforcement for potential fraud. Any provider and/or claim that are part of an ongoing investigation can be added to the lists in the RAC Data Warehouse by the appropriate contractor, law enforcement agency or the OIG, thereby marking them as off-limits for RAC review. Unlike exclusions however, suppressions are temporary. Once removed from the list, they are again fair game for the RAC. (See SOW, pp. 10, f.)


It is conceivable therefore, that during the process of review a RAC could be informed that certain claims and/or providers have been “suppressed” and made off-limits, at least temporarily. Hence the RAC might be asked to rescind their reviews for claims from that provider, pending the outcome of any investigation.


Are those the only likely reasons to rescind a review? Not hardly. While researching this article I have heard of several other reasons why RACs might rescind reviews, and none are ominous.


Other Reasons to Rescind


We could group these other reasons together and just call them “Mistakes or Misinterpretations” by the RAC. Everyone makes mistakes, and government contractors are certainly no exception to the rule.



CERT Reviews


For example, during the RAC Demonstration Project, the pilot program for the permanent RAC program, reviews were conducted by the RACs on claims that were also being reviewed by the CERT program. CERT reviews were not being reliably entered into the RAC Data Warehouse and as a result, there were claims being reviewed by both entities, simultaneously. The process appears to still be “buggy” according to some providers I spoke to about this. CERT reviews are still not being entered correctly into the RAC database and this has been the reason for some known rescissions.


Critical Access Hospitals


Another “mistake” made by some RACs has been to do reviews and issue denials for claims from Critical Access Hospitals (CAHs). To date, CMS has not determined a final methodology to appropriately calculate recoupment from CAHs, due to the complex and different manner in which they are paid (based on reported costs), as opposed to the way that other facilities are paid under the inpatient prospective payment system (IPPS), which pays based upon the DRG system. So while reviews can be conducted for CAHs, there can be no review results letters or demand letters, and therefore no recoupment can be done — yet.


Nevertheless, there have been some CAHs mistakenly receiving review results and demand letters. In those situations the RAC was required by CMS to rescind the reviews. It seems odd to me that the RACs would even be issuing records requests to CAHs since they do have a set time limit on how long they can spend reviewing a record. I suppose they could always ask for an extension, which is allowed for in the SOW, but surely CMS would question what the RAC is thinking.


MAC Transition Timeframe


There have been some rescissions made due to claims that were inadvertently submitted to a Medicare Administrative Contractor (MAC) during a blackout period, while said MAC was ramping up to process Medicare claims. One such period was July 30, 2008 through August 3, 2008. Claims submitted during that time period would have to be regenerated by the provider and resent to the MAC after the blackout period in order to be processed.


Evidently such claims, although not processed by the MAC, seem to have made it into the CMS Data Warehouse and some were subsequently reviewed by the RAC. Any such reviews would have to be rescinded. I would imagine that the RAC would later find the resubmitted claim and then review it.


The 3-Day Payment Window


Finally, there have been cases where the RACs were required by CMS to rescind their reviews as a result of a newly clarified definition of “other services related to [an] admission” provided to a Medicare beneficiary by a hospital on the date of the inpatient admission or during the three days immediately preceding the date of admission.


The new definition was a result of the “Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010,” which was signed into law by President Obama on June 25, 2010. CMS issued a memorandum about it and also adopted regulations using the new definition in the IPPS final rule, as of July 30. Since that time, CMS has required the RAC to rescind reviews that did not conform to the new definition. (A complete explanation is available on the CMS website.)


After Rescission, Then What?


We have heard that some rescissions have later been picked up by the RACs. That is, the same claim (or a subsequent submission of the same patient visit/stay) was later again reviewed by the RAC, with results and denials occurring as per the usual process.


So a rescission is temporary and does not mean the claim will not later be reviewed by the RAC.





Providers should remain vigilant and always check the work of the RAC. There is no guarantee that what they send to a provider is ultimately correct and conforms to all of CMS’s guidance and regulations.


Rescissions are temporary and will likely not be a very common occurrence. Nevertheless, as we saw above, there are several good reasons for the RAC to rescind some reviews. I’m sure the ones I’ve listed above are only a few of many.


The good news is that while it might appear at first glance the RAC is up to something about which to be fearful, there really doesn’t seem to be any reason to be anxious.


No more than you already are.


About the Author


Ernie de los Santos is the chief information officer for eduTrax®. He joined the company at its inception and has been responsible for the creation, development and maintenance of the eduTrax® portals – a set of Web site devoted to providing knowledge, resources and compliance aids for U.S. healthcare professionals who are involved in revenue cycle management.


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