It may be the calm before the storm for providers subject to the Recovery Audit Contractor program. As soon as this week, the first audit letters requesting medical records of hospitals are expected to be sent out to hospitals under the new program.
The audits are in the mail
First RAC letters could arrive as early as this week
While the CMS is optimistic that the permanent program will run far more smoothly than the controversial pilot project, hospitals in the meantime have no choice but to adopt a wait and see approach and get educated as best they can on a program that has often been viewed by the industry as a bounty-hunter tool.
We constantly work with our auditors and other resources in our compliance efforts as regulations change. It is unfortunate that, for nearly all hospitals, the issues that will be uncovered are the result of the complexity of the system and not the intent to defraud our patients or the Medicare program, said Christopher Stipe, CEO of 25-bed Clarinda (Iowa) Regional Health Center.
The RAC audit program allows third-party auditors hired by the CMS to keep 9% to 12.5% of payments they identify as improper and then collect from providers (Feb. 16,
p. 10). The CMS, which pilot-tested the RAC program in several states, believes it will cut down on fraud and save the government money. Hospitals, however, remain concerned that they will stand to lose financially under the scrutiny of the RACs, despite some changes the agency made between the pilot and final versions of the program. Meanwhile, the American Hospital Association created a RAC tracking program that could provide fodder for its efforts to potentially change the program down the road (May 4, p. 17).
The CMS is in the process of implementing the RAC program in 24 states. The remaining 26 states will be implemented in August, according to an agency spokesperson.
As of yet, all appears to be quiet on the auditing front. There really isnt anything to report on RAC activities, said Connie Leonard, director of the CMS Recovery Audit Operations Division. Before a RAC can review a claim area, the issue identified by a RAC needs to be approved by the CMS. An example of an issue would be duplicate claims. If the RAC wanted to review claims for duplicates, they would come to the CMS to get the issue approved. The CMS would then approve the issue and the RAC would be able to review the claims data for duplicates, she said. To date, no issues have been approved but some are in the approval process.
It is also too early to answer the question of is the program running smoothly. Obviously CMS believes the program will run smoothly because of some of the changes we have made from the pilot, Leonard said.
Hospitals are in a ramp-up mode right now, said Nancy Hirschl, president of consulting firm Hirschl and Associates, Laguna Niguel, Calif. To her knowledge, RACs have held education and program introduction sessions with providers, she said. She estimated that many hospitals will start to receive audit request letters from the RACs by June 1. Hospitals have 45 days from the date a medical record request letter is received to copy the records and give them to the RAC, which in turn has 60 days to respond, she said.
Ron Connelly, a partner with Powers Pyles Sutter & Verville in Washington, doesnt expect some audits to take place until later this year. So far, none of our clients have been audited in the permanent RAC program for medical necessity. I expect those will come in the fall, he said. It may be even later than that. The American Hospital Association recently reported that the CMS does not expect the RACs to conduct complex reviews for medical necessity of hospital services until 2010.
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