CMS Announces Updated List of RAC Program Improvements for New Contracts

On December 30, 2014, CMS published on its website an updated list of Recovery Auditor program (RAC) improvements. Click here to view CMS document. The improvements are effective as the new RAC contracts are awarded – after December 30, 2014. A few of the changes are as follows:

“CMS will establish ADR limits based on a provider’s compliance with Medicare rules.   Providers with low denial rates will have lower ADR limits while provider with high denial rates will have higher ADR limits. The ADR limits will be adjusted as a provider’s denial rate decreases, ensuring the provider that complies with Medicare rules has less Recovery Audit reviews.”

“CMS will limit the Recovery Auditor look-back period to 6 months from the date of service for patient status reviews, in cases where the hospital submits the claim within 3 months of the date of service.”

“Recovery Auditors are required to have a Contractor Medical Director and are encouraged to have a panel of specialists available for consultation. In addition, physicians are afforded the opportunity to discuss the improper payment identification with the Contractor Medical Director, who is a physician.”

“Recovery Auditors will not receive a contingency fee until after the second level of appeal is exhausted. Previously, Recovery Auditors were paid immediately upon denial and recoupment of the claim. This delay in payment helps assure providers that the decision made by the Recovery Auditor was correct based on Medicare’s statutes, coverage determinations, regulations and manuals. Note: if claims are overturned on appeal, providers are paid interest calculated from the date of recoupment.”

We continue to anticipate word from CMS about what, if any, RAC activity will occur on and after April 1, 2015 with respect to short stays, and what the role of the MACs will be in examining short stays. There are various proposals to address the “problem” of the short stay, and there is widespread acknowledgement that the appeals process for RAC denials has been overwhelmed so we anticipate continued announcements by CMS about standards for, and reviews of, short stay cases.

We will keep you apprised of CMS announcements.