Health Information Management

RAC demand letter responsibility shifted to MACs

HIM-HIPAA Insider, August 23, 2011

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RACs previously had been responsible for issuing demand letters to providers, but a July 29 transmittal shifts this responsibility to Medicare administrative contractors (MAC). This move reflects CMS’ desire to increase consistency and efficiency through automation.

RACs will continue to handle this responsibility until January 3, 2012, when the responsibility officially switches over to the MACs. As a result, when a recovery auditor finds an improper payment, it will submit claim adjustments to the MAC, and the MAC will then establish receivables and issue automated demand letters for any identified overpayment. The MAC will then follow the same process it uses to recover any other payment, according to the accompanying MLN Matters article.
This should help providers, according to Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc. “Many providers face timing difficulties when it comes to demand letters and actual recoupments,” she says. “That will be consolidated at the MAC level and thus eliminate the confusion of MAC and RAC coordination. . . .[In addition] it should help providers have more consistency with the process of recoupment and ease the process of anticipating dates of recoupment.”
The transition of responsibility from RAC to MAC does raise some concerns for larger facilities according to Rachel Williams, RHIT, audit contractor coordinator at Indiana University Health in Indianapolis.
“Our organization has seven acute-care hospitals across the state, and we currently have issues with obtaining audit information from our FI/MAC because they send communication via the addresses on our 855A form, which are either physical facility locations or PO boxes in another state,” she says. “They don’t address [correspondence] to specific individuals as our RAC currently does, so our concern is obtaining and responding to the demand letters within the 30 days prior to recoupment.”
Her organization’s policy is not to allow recoupment. “Instead we refund or appeal, so this transition could impact our response to those deadlines,” she explains.
Whether this CMS announcement has a positive, negative, or neutral affect remains to be seen. However, as of January 3, 2012, providers do need to know that demand letters will no longer be coming from their respective RACs.
To read more, visit the Revenue Cycle Institute website.

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