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No One Immune to RAC Efforts As Recovered Dollars Soar

July 12, 2012:

Deborah C. Hall, Clinical/Technical Editor

Regardless of the type of provider, the recovery audit contractor (RAC) reviews have recovered significant overpayments. Data from the Centers for Medicare and Medicaid Services (CMS) indicate that total corrections the RACs found increased from $92.3 million for all of 2010 to a whopping $939.3 million in 2011. If efforts continue at the current pace, the RACs are well on the way to outpacing fiscal 2011 total recoveries in 2012.

According to the National Recovery Audit Program Quarterly Newsletter, between January 1 and March 31, 2012, the RACs recovered $588.4 million in overpayments and returned $61.5 million in underpayments. The table below shows the totals for each region.

Region Overpayments Collected Underpayments Returned Total Quarter Corrections FY to Date Corrections
Region A: DCS (Diversified Collection Services) $112.6 $11.3 $123.9 $201.7
Region B: CGI (CGI Federal) $60.8 $4.8 $65.6 $137.7
Region C: Connolly $202.8 $20.1 $222.9 $343.0
Region D: HDI (HealthData Insights) $212.2 $25.3 $237.5 $390.2

Dollars in Millions

Providers who disagree with RAC findings do have recourse in the form of appeals. Although it should be noted that only a small percentage of the total number of RAC decisions are overturned on appeal, approximately 43 percent of the decisions physicians challenge are overturned, as shown below.

Type # Claims with Overpayment Determinations # Claims Appealed at Any Level Percentage Appealed at Any Level # of Decisions in Providers’ Favor % of Denials Overturned on Appeal
A 197,739 27,158 13.7% 6,266
Region B: CGI (CGI Federal) $60.8 $4.8 $65.6 $137.7 3.2%
B* 410,208 20,406 4.9% 14,352 3.5%
DME* 295,425 9,056 3.1% 3,930 1.3%
TOTAL: 903,372 56,620 6.3% 24,548 2.7%

* Often, Part B and DME claims are corrected through the appeals process, which means that the reason for the denial is upheld but the provider is allowed to correct the claim and rebill using the appropriate code(s).

Findings in regions A, B, and C indicate that the medical necessity of inpatient cardiovascular procedures is the top overpayment issue. Medicare pays only for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients undergoing cardiovascular procedures needs to be complete and support all services provided in the setting billed.

HealthDataInsights, the RAC for region D, indicates that the top overpayment issue for that region is billing minor surgery and other minor treatments as being provided during an inpatient stay. Medicare guidelines state that there are specific criteria for what constitutes an inpatient stay when a patient with known diagnoses enters a hospital for a specific minor surgical procedure or other minor treatment. If that procedure is expected to keep the patient in the hospital for less than 24 hours, the patient is considered an outpatient for coverage purposes regardless of the hour he or she presented to the hospital, whether or not a bed was used, and whether the patient remained in the hospital after midnight.

This doesn’t mean that physician practices are off the hook. Each of these regions are also reviewing a significant number of Part B claims for issues such as but not limited to bronchoscopies, IV hydration, place of service errors, and unbundling of the surgical package.

Recovery Audit Contractors review claims on a post-payment basis using Medicare policies including NCDs, LCDs, and CMS manuals. The RACs conduct two types of review: targeted (automated) reviews in which no medical record documentation is requested and complex reviews, which require the review of medical record documentation. Complex reviews are conducted for coding errors, DRG validation, and medical necessity verification.


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