New RACs and new rules
CMS has selected five new recovery audit contractors (RACs) and established new rules. RAC audits will undoubtedly resume soon. Performant and Cotiviti were awarded contracts, along with HMS Federal Solutions. A previous RAC auditor, CGI Group, did not bid in the latest round of contracts for RACs. Performant will focus on auditing home medical equipment (HME), home health agency (HHA) and hospice claims.
CMS will continue to pay RAC auditors a contingency fee when overpayments are identified. Providers frequently point out that RACs are incentivized to find erroneous overpayments and these errors have resulted in a multi-year backlog of claims pending appeal, especially before administrative law judges (ALJs). Nonetheless, CMS announced that RAC auditors have recouped $8 billion for the federal government since the audits began in 2009.
Under previous rules, RACs received payments for overpayments they identified in less than 45 days. Under new rules, RACs will now receive payments for overpayments they identify only after providers have an opportunity to appeal through the second level of an appeal process that provides five stages of appeals. As a result of this change, contingency rates for payments to RACs will likely increase substantially, from the current 9.5% to 12%.
Also under previous rules, RACs could review claims that were up to three years old. Under new rules, claims reviewed by RACs cannot be more than six months old.
Audits by RACs have been on "pause" while new rules were developed and disputes about the contracting process resolved. When RAC audits resume, providers can expect more of the same, i.e., a focus on vague eligibility criteria, such as home bound status and terminal illness, which are open to broad interpretation.
RAC auditors are also likely to continue their focus on whether care that was provided was reasonable and necessary. Unfortunately, RAC reviewers often seem to evaluate this issue very differently than providers who are "on the ground," so to speak. It seems reasonable to require RACs to cite national standards of care to support their conclusions that care provided was not reasonable and necessary. Without such support, what constitutes reasonable and necessary care seems to be "in the eye of the beholder," which makes such determinations extremely difficult for providers to address on appeal.
CMS's initial meeting with new RACs is in November. Audits will begin soon thereafter.
As always, the "name of the game" for providers with regard to all types of audits, including RAC audits, is documentation, documentation and more documentation! Although it is an age-old "story" and most clinicians certainly know how to provide appropriate documentation, consistently excellent documentation appears to remain elusive.