Home Health & Hospice

Prepare for RACs to Wreak Homecare Havoc

Homecare Insider, February 23, 2009

The Tax Relief and Health Care Act of 2006 contained a provision that may soon be the greatest source of grief for homecare providers since Operation Restore Trust (ORT) in the mid-1990s.  The provision: Recovery Audit Contractors (RACs).

The Centers for Medicare & Medicaid Services (CMS) conducted a demonstration program in three states, California, Florida, and New York.  The program included review of the last four years of hospital inpatient and outpatient, skilled nursing facility, physician, ambulance, laboratory, and durable medical equipment (DME) claims.  The RACs identified $371.5 million in Medicare incorrect payments during fiscal year 2007, returning $247.4 in overpayments to the Medicare Trust Fund.  The great majority of overpayments (85 percent) were the result of claims that did not comply with Medicare’s coding or medical necessity policies and rules.

The CMS believed these results were so good that the program will become permanent and gradually expand to every Medicare provider by January 2010.  The RACs use automated software programs to identify potential payment errors in such areas as duplicate payments, intermediaries’ mistakes, medical necessity, and coding.

The most controversial issue is payment of the RACs.  Unlike other Medicare contractors, RACs receive a percentage of the moneys recouped.  According to the CMS RAC Web site (http://www.cms.hhs.gov/RAC), contingency fees range from 9 to 12.5 percent.

Those who survived ORT know how difficult it for outside contractors to evaluate compliance with the vague concepts of “homebound” and “reasonable and necessary.”  Preconceived, pat beliefs, such as a patient cannot receive more than three aide visits a week, can lead to massive denials and hassle.  It’s essential to know and follow the rules and coverage criteria.

Because the final details for the RAC “invasion” of homecare are not yet available, there are two strategies for preparation.  Pay attention to every Medicare case going forward.  And register for Beacon Health’s audio conference on March 19.  You’ll learn about the process and some important preparation tips.  For more information, click here.