Recovery Audit Case Study

Recovery Audit Contract
Prior Government Accountability Office work has helped identify problems with Centers for Medicare and Medicaid Service’s actions to address improper payment vulnerabilities, and Department of Health and Human Service states that “prior Office of Inspector General(OIG) work identified problems with CMS’s inability to address referrals of potential fraud” (URL 2011). Hence, Congress created the Recovery Audit Contractor Program that was designed specifically to protect Medicare by detecting improper payments, and referring potential fraud to the Centers for Medicare and Medicaid Services(CMS). Given the critical role of identified improper payments, the effective oversight of RAC performance has been crucial.
In March 2010, a memorandum from President Obama was directed to Federal Agencies to expand their use of recovery audit in an effort to reduce improper payments. According to Abbey Pendleton and Jessica L. Gustafson, “the Patient Protection and Affordable Care Act (PPACA) was signed into law, expanding the Recovery Audit Contractor program to include claims submitted under Medicare Part C, Medicare Part D and Medicaid” (URL, 2011). Although the implementation of the constitutional mandate to expand the RAC program has been assumed slower than expected, it is acknowledged that the Centers for Medicare & Medicaid Services (CMS) is now actively moving forward with RAC program expansion. Lauren Philips explains that “the RAC process is full of data points that can help organizations improve its processes and streamline efficiency, by regularly reviewing data about the number of overpayment claims” (URL, 2010). Likewise, hospitals that continue to see increase in RAC, audits, according to latest survey by the American Hospital Association which has shown great success. Nothing is perfect in this world, but without an audit response team, organization will be prone to fraud, abuse and improper submission of claims and over payment. The Centers for Medicare and Medicaid Services (CMS) initiated the Recovery Audit Contractor (RAC) that began in 2005 as a demonstrated project in California. California Hospital Association states “under the RAC program, private companies are contracted to retrospectively review Medicare claims for potential over payment or under payments” (URL, 2008). Major areas of focus in California have been the medical necessity of admission to Inpatient Rehabilitation Facilities (IRFs) and patients admitted to acute care for one-day or short acute care stays. In attempt to demonstrate the RAC project, a lot of patients claims were denied based on the RAC’s subsequent determination that those important medical services were not necessary. Providers also reported various issue with communication, documentation and reimbursement recovery. The controversy with the RAC program made the California Hospital Association communicate with Centers for Medicare Services and advocating for legislative action to mandate changes to the RAC program. A report from Debra A.
Mccurdy says according to Centers for Medicare Services, “the Medicare Fee-For-Service Recovery Auditor Program identified and corrected $2.57 billion in improper Medicare payments in FY 2014” (URL, 2015). The lion’s share of this amount $2.39 billion signified overpayments collected, compared to $173.1 million in underpayments reimbursed to providers. In view of all programs costs (other than expenses incurred at the third and fourth levels of appeal), Centers for Medicare Services concluded that the Medicare Fee-for-Service Recovery Audit Program returned more than $1.6 billion to the Medicare Trust
Funds. Recovery Audit Contracts program can play a positive role in identifying and correcting improper payments and returning money to Medicare trust funds but, in addition to recoveries, as a medical coder, there should be a request for a window into areas where additional provider education, pre-payment or post payment edits, data mining and/or medical record review practice in the organization quarterly.
Furthermore, as we all work to implement the new requirement and assuring the accuracy of data as well as prevention of the RAC audit, the Centers for Medicare Services can examine the reports and lessons learnt for improvement that could have been made by the RAC program and purse other efforts to reduce and eliminate improper payments. Sometimes change can bring about the growth of a successful empire but, with CMS initiating the RAC program, it won’t be a hundred percent guaranteed that it will be
prevented. According to Principles of Healthcare Reimbursement, the Recovery Audit Contractors are able to find a large volume of improper payments, Providers are not allowed to appeal every overpayment determination, overpayments collected were significantly greater than the program costs. The textbook states that in all new issues, a RAC wishes to pursue for overpayments validated by CMS or an independent RAC Validation Contractor and sharing the upcoming new issues with provider organizations, each new RAC to hire a physician medical director as well as certified coders. It is important for providers to stay aware of the audit issues posted by their RACs, especially items and services where the RACs have a particular focus.