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Medical Coding News Archives

CMS Has Approved Audit Issues for RACs

 
September 22, 2009:

After months of providers wondering what types of claims the recovery audit contractors (RACs) would be examining, the Centers for Medicare and Medicaid Services has finally approved a number of issues to be audited. This allows providers of all types to see the areas that will receive the most focus so that they can perform internal audits to ensure that the correct coding and billing requirements have been followed. 

To date the following issues will be audited:

Audit Issue

State

Wheel Chair Bundling

AL, AR, CO, FL, GA, LA, MS, NC, NM, OK, SC, TN, TX, VA, WV

Urological Bundling

AL, AR, CO, FL, GA, LA, MS, NC, NM, OK, SC, TN, TX, VA, WV

Clinical Social Work Services

FL

Blood Transfusions

AL, FL, GA, SC

Untimed Codes

AL, FL, GA, NCSC

IV Hydration Therapy

AL, FL, GA, SC

Bronchoscopy Services

AL, GA, SC

Once In a Lifetime Procedures

FL, GA, NC, SC

Pediatric codes exceeding age parameters

AL, FL, NC, SC

Pegfilgrastim Injections

FL, GA, NC, SC

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 established a three-year demonstration program to detect and correct improper Medicare payments, both over- and underpayments. Overpayments occur when physicians or other health care providers submit claims that do not meet Medicare’s coding or medical necessity policies. Underpayments may occur when providers incorrectly code claims—for example, reporting a minor procedure when the medical record documentation indicates that a more complicated procedure was performed.

In 2005, CMS announced a new demonstration project using recovery audit contractors. The goal of the demonstration program was to determine whether the use of RACs was cost-effective in ensuring that correct payments are being made to providers. The RACs receive a contingency fee based on both the overpayments and underpayments they identify.

The RAC demonstration program was conducted in New York, Massachusetts, Florida, South Carolina, and California (the states with the largest number of Medicare claims) and ended in March 2008 with CMS collecting $371.5 million in improper Medicare payments from health care providers and suppliers included in the demonstration program during fiscal 2007. The entire project recovered more than $900 million in overpayments between 2005 and 2008. Similar to what was found through the CERT program, the majority of improper payments identified by the RAC demonstration resulted from claims that did not comply with Medicare coverage or coding guidelines.

The Tax Relief and Health Care Act of 2006 (TRHCA) required the RAC program to be made permanent and expanded nationwide no later than January 1, 2010. Although a review of evaluation and management (E/M) services was not included in the earlier RAC demonstration, it will be permitted under the permanent RAC program.

The national Recovery Audit Contractors include:

  • Diversified Collection Services, Inc., initially in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and New York
  • CGI Technologies and Solutions, Inc., initially in Michigan, Indiana, and Minnesota
  • Connolly Consulting Associates, Inc., initially in South Carolina, Florida, Colorado, and New Mexico
  • HealthDataInsights, Inc., initially in Montana, Wyoming, North Dakota, South Dakota, Utah, and Arizona

Additional states will be added to each RAC jurisdiction as the program is implemented. The RACs are required to employ a staff consisting of nurses, therapists, certified coders, and a physician medical director.

Deborah C. Hall
Clinical Technical Editor

 

 
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