Nine Things to Know About RACs

Following a two-year demonstration project in four states, Medicare’s Recovery Audit Contractor (RAC) program is going nationwide in 2009. They are rolling out the expansion of the program a few states at a time starting in March. The RACs have used the demonstration period to refine their processes and are expected to have a much faster ramp-up in the remaining forty-six states. Here are nine important points to know:

1. If you bill Medicare, you can be audited.

2. RACs are paid on a contingency basis. They are more likely to look at high-dollar services and aberrant patterns of billing. The RACs will not review every claim, as Medicare receives 1.2 billion claims per year (a mere 9,579 claims per minute). Outliers, be it in dollars or coding patterns, are at greatest risk for audit.

3. RACs seem to be more attuned to finding overpayments than underpayments. During the demonstration project, 96.3 percent of overpayment/underpayment dollars identified by RACs resulted in overpayments in which the RACs requested that providers return money. The remaining 3.7 percent resulted in underpayments in which the RACs asked Medicare to send providers extra money. Put another way, your friendly neighborhood RAC is about 26 times as likely to ask you to repay money as it is to send you a check for underbilling your services.

4. Don’t bill Medicare until a service has been documented; this includes your dictation.

5. Don’t rush your response to a RAC request. You have 45 calendar days to respond. Use that time to review your coding/documentation.

6. Do not delegate RAC responses to just anyone in the office. This cannot be overemphasized.

7. You can (and should) appeal RAC decisions if you feel their decision was incorrect; 14 percent of overpayment decisions during the demonstration were appealed, a full one-third of these appeals were successful. By comparison, only 4 percent of Medicare denials are ever appealed even though 59 percent of the time these appeals are successful. Do not accept all Medicare denials and RAC overpayment decisions at their face value.

8. At times, a proper RAC decision can (and should) be rebilled to Medicare. For example, your RAC may find you were paid in error for an echocardiogram because it was done in the office but billed as if it were done in an inpatient setting. Rebill the service using the correct site of service code, and (if the statute of limitations for timely filing has not passed) you can get paid.

9. The number of records a RAC can request from a practice is determined by how the practice bills Medicare, as RACs request records per billing NPI. If you are billing Medicare under a group NPI, the number of records a RAC may request is less than if each physician bills Medicare under his own NPI. The following limitations apply:

a. Solo practitioners - 10 records per 45-day period
b. 2-5 provider practices - 20 records per billing NPI per 45-day period
c. 6-15 provider practices - 30 records per billing NPI per 45-day period
d. 16 or more provider practices - 50 records per billing NPI per 45-day period
We don’t yet know the full impact of RACs on the physician community, as our exposure to RACs during the demonstration was limited. While only 2 percent of the overpayments were attributable to physicians, the demonstration did not include determinations according to E&M code selection. Unfortunately, the new guidelines permit RACs to review your E&M coding and documentation to identify potential overpayments/underpayments.

No doubt, RACs will present another administrative burden to our practices. But don’t be overwhelmed. Continue to make sure that you and your practice are consistently solid in your documentation, coding, and billing processes; appeal RAC decisions that you feel are incorrect; and do not let this latest incursion affect what you do best - care for your patients.

Lucien Roberts, III, MHA, FACMPE, is executive director of Neuropsychological Services of Virginia. He also consults with medical groups and health systems in areas such as compliance, physician compensation, negotiation, strategic planning, and billing/collections. He may be reached at lucien.roberts@yahoo.com or via physicianspractice@cmpmedica.com.