Corporate Compliance

Note from the Instructor: CMS Makes Big Changes to the RAC Program

Medicare Insider, January 6, 2015

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This week’s note from the instructor is written by Kimberly Anderwood Hoy Baker, JD, regulatory specialist for HCPro.  
On December 30, CMS released a new version of the Recovery Audit Program Improvements document they have had posted on their website for some time. The new version has significant, positive changes for providers that should improve providers experience in dealing with Recovery Auditors. 
One of the most significant improvements is a limitation on the look-back period for patient status reviews. Formerly, Recovery Auditors could look back at and review claims paid in the prior three years. Under the announced improvements, if a hospital submits a claim for an inpatient stay within three months of the date of service, the Recovery Auditor will only have six months from that date of service to review the claim. Presumably, beyond six months, the Medicare Administrative Contractor (MAC) will still be able to open claims during the normal reopening period (four years), but this would significantly limit the Recovery Auditors ability to review claims long after the fact.
Another significant improvement from a provider’s perspective is a tightening of the timeframe for the Recovery Auditors to complete their review of a claim. Recovery Auditors will only have 30 days to complete their complex reviews and notify providers of their findings. This matches the new Additional Development Request (ADR) review timeframe for MACs that CMS announced in October 2014. 
The new improvements continue the “discussion period” process, but with a very significant change. The Recovery Auditor must wait 30 days following their determination, to allow the provider to request a discussion with the contractor, prior to sending the claim’s adjustment request to the MAC for recoupment. And the Recovery Auditors must maintain a process for confirming receipt of provider correspondence, including discussion requests, within three days of receipt. 
As for the volume of reviews, three significant changes should assist providers who have felt over-burdened by inpatient status reviews. First, reviews will be “diversified” across all claim types (e.g. inpatient, outpatient, etc.). Second, providers new to reviews will have review limits applied incrementally to allow them to adjust to reviews. Lastly, providers with a low level of denial rates will have a lower level of review, and rates will be adjusted as a provider’s denial rate declines.
In addition to the improvements to address provider’s concerns, CMS also instituted several performance standards for the Recovery Auditors. They must maintain an overturn rate of less than 10% at the first level of appeal. If they don’t, they will be placed on a corrective action plan, including decreasing ADR limits or ceasing certain kinds of reviews until the problem is corrected. In addition, for automated reviews they must maintain a 95% accuracy rate or there will be a progressive reduction in their ADR limits.
Unfortunately, the improvements are not set to go into place until the next Recovery Auditor contracts are in place. The only new contract currently in place, effective December 30, 2014, is the DME, Home Health and Hospice Recovery Auditor, which was awarded to Connolly, LLC. CMS also announced that Region 3 would be in place by the end of 2014, but there’s been no word on a new contractor. The last update on the CMS website indicates that Regions 1, 2, and 4 will not be awarded until late summer 2015.

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