by Aricka Flowers
HHNS staff writer
Aricka Flowers
As the Recovery Audit Contractor program’s January 1, 2010 implementation date nears, this new challenge to healthcare provider revenue looms as an imminent reality. Many providers look at the few remaining weeks between now and 2010 and are racked with fear and anxiety. Is the trepidation warranted? Not all of it, according to officials from the Centers for Medicare and Medicaid Services (CMS).
The first hint that RACs may not be an immediate sign of troubles to come stems from the whopping $37.8 million that was paid to providers during the program’s demonstration phase. Correcting underpayments is also part of the RACs’ assignment.
From 2005 through 2008, CMS’s RAC test run covered six states. During that time, three companies, PRG-Schultz, HealthDataInsights and Connolly Consulting, were granted contracts to identify and correct improper Medicare payments in California, Florida and New York. Later in the demonstration, Arizona, North Carolina and Massachusetts were added.
The three contractors were paid on a contingency basis; earning a percentage of the improper payments they identified and corrected. Though some feared a straight commission compensation plan might provide incentive for contractors to be overly aggressive, CMS officials point out that these RACs were instructed to detect and correct both under and overpayments in the Medicare Fee For Service program. RACs were also expected to provide CMS and Medicare contractors information that would assist in helping reduce the rate of error.
During the trial period, RACs identified more than $1 billion in improper Medicare payments; 96% were overpayments and 4% were underpayments made by CMS to the provider. This means that providers who were unaware they were owed money by CMS were finally paid – to the tune of close to $38 million.
If there is a positive side to the RAC program, this is it. Medicare’s complex payment process is one of the most common complaints amongst Medicare providers, who say it is fairly typical to wait an excruciatingly long time for payment for services from their fiscal intermediary. Home care providers just may find, as hospitals in six states found 4% of the time during the demonstration, that RACs will be bringing them money.
A second note of relief is access to the government’s existing appeals process. If a RAC finds that a provider has been overpaid by the agency, all is not lost. Providers will have a chance at clearing their name thanks to a safety net that was tested during the demonstration period – the right to appeal. During the program’s test run, 22.5% of RAC determinations were appealed and more than 40,000, almost eight percent, of those decisions were overturned; which means providers will actually have a fighting chance at disproving alleged overpayments.
The RAC demonstration also helped iron out kinks in the program, which resulted in multiple amendments to the plan. One example is the requirement that all RACs have a medical director on staff. Additionally, the demonstration birthed the decision to change the way RACs file claims, so as to ease the process for providers who want to appeal an overpayment determination. The change will allow providers to easily identify the claim they are contesting and why that decision was made.
Most importantly, the demonstration resulted in a call for oversight of RACs. As a result, an independent, third-party will be given the task of reviewing RAC claim determinations. Additionally, RACs will not be able to look very far back into a provider’s records. The look-back period was capped at three years thanks to the RAC test period. CMS is also investigating service-specific RAC findings in hopes of identifying problem patterns in specific areas or specialties, which could help providers get paid sooner in some cases.
The RAC demonstration also found that most instances of underpayments were found at in-patient facilities such as nursing homes and hospitals. Consequently, providers that maintain such facilities should not immediately fear the presence of a RAC because there is a chance the dreaded nuisance could result in a fiscal blessing in disguise. So, although the program may seem like just one more way to separate you from your payments, lessons learned during the demonstration process could turn the program into a positive development for both providers and CMS officials alike.
