The CMS has approved the first medical-necessity review audits for the Recovery Audit Contractor program, according to agency officials.
Medical-necessity reviews are a type of advanced audit that will determine whether medical care given to a patient was appropriate or not. The American Hospital Association has expressed concern that RAC auditors may lack the necessary clinical and Medicare knowledge to determine whether prior hospital care was reasonable or necessary.
Specifically, the reviews were approved by the CMS New Issue Review Board, which was created by the CMS to offer greater oversight of RAC audit subjects. The agency says it has approved 18 types of inpatient hospital claims and one type of durable medical equipment claim.
The RAC program allows third-party auditors hired by the CMS to keep 9% to 12.5% of provider payments they identify as improper. It now conducts audits only in fee-for-service Medicare, but provisions in the new healthcare reform law call for an expansion of the RAC program to Medicare Parts C and D and Medicaid by Dec. 31.
Although the medical-necessity reviews have been approved, they have not yet been posted to the RAC contractor's websites. “I expect this to occur soon,” a CMS spokesperson said. Each RAC contractor must post on its website the specific audits it will conduct before issuing documentation requests to hospitals for these types of reviews, according to the CMS.
