Health Information Management

CMS identifies total improper payment figures, top RAC issue per region

HIM-HIPAA Insider, May 3, 2011

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CMS released a short but useful Recovery Audit Contractor (RAC) update on its website last week reporting the total amount of improper payments identified since the RAC demonstration period.

From October 2009 through the end of March 2011, RACs identified $312.2 million in overpayments and $52.6 million in underpayments, totaling $365.8 million in improper payments. Compared to the $1.03 billion of improper payments identified in the demonstration program, these numbers are miniscule, but a significant bump last quarter may indicate significant growth is on the way.
The doubled amounts ($184.6 million) in the first quarter of 2011 is a true reflection of the rapid expansion of RAC audits, according to Donna D. Wilson, RHIA, CCS, CCDS, senior director at Compliance Concepts, Inc., in Wexford, PA.
“RAC contractors are reviewing a large volume of DRGs for coding and medical necessity,” she says. “We are at the point where we want to request that the RACs post only those DRGs not under review.”
In addition to the identification of total improper payments, CMS also highlighted the top RAC issue per RAC region from fiscal year 2010 through March 2011. Incorrect coding causes two of the four issues identified. The others are caused by billing for bundled services (DME provided during an inpatient stay) separately, which should trigger providers to investigate a potential area of vulnerability, according to Kimberly Hoy, JD, CPC, director of Medicare and Compliance for HCPro, Inc.
“Providers need to be paying attention when they have separate national provider identifiers (NPI) that are providing various pieces of services and billing Medicare separately,” she says. “This can begin to cause errors if there is a lack of communication between divisions of the hospital.”
Editor’s note: To read more, visit the Revenue Cycle Institute website.

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