Medicare Recovery Audit Contractors (RACs)

1. MedicareRecovery Audit Contractors (RACs) Connie Leonard, Director, Division of Recovery Audit Operations Melanie Combs-Dyer, CMS RAC Senior Technical Advisor 1

2. Background: IPIA • Improper Payment Information Act requires federal agencies to measure improper payment rates • “Improper payments” include • overpayments • underpayments 2

3. RAC Legislation • Medicare Modernization Act Section 306: required RAC demonstration • Tax Relief Act and Healthcare of 2006, Section 302: requires permanent and nationwide RAC program by no later than 2010 • Both statutes gave CMS the authority to pay RACs on a contingency fee basis. 3

4. RAC Program Mission… • to detect and correct past improper payments, • to implement actions that will preventfuture improper payments. • Providers can avoid submitting claims that don’t comply with Medicare rules • CMS can lower its error rate • Taxpayers & future Medicare beneficiaries are protected 4

5. Results of the RAC DemonstrationCollections exceeded costs Report now available at www.cms.hhs.gov/RAC 3/27/05-3/27/08 (Claim RACs & MSP RACs) 5

6. Results of the RAC DemonstrationAppeals were minimal Cumulative through 3/27/2008 6

7. Results of the RAC DemonstrationRACs affected a very small percentage of all Medicare Payments $1.0 billion $316 billion Medicare Payments corrected by the RACs Medicare Payments Unaffected by RACs 0.3% 99.7% 3/27/05-3/27/08 (Claim RACs & MSP RACs) 7

8. Results of the RAC DemonstrationMost overpayments were collected from inpatient hospitals 6% IRF, $59.7m 85% Inpatient Hospital, $828.3 m 2% Skilled Nursing, $16.3m 4% Outpt. Hospital, $44.0m 1% Durable Med Equip, $6.3m 2% Physician, $19.9m <1% Ambulance/Lab/Other, $5.4m 8 SOURCE: RAC Data Warehouse

9. Lessons Learned Concern: RACs had a significant financial impact on some providers • Change: • Limit the number of medical record requests • Limit the RAC “look-back period” • Concern: RACs were not required to hire physicians and certified coders • Change: • CMS has required each RAC to hire a physician medical director • CMS has required each RAC to hire certified coders • Concern: Some providers questioned the accuracy of RAC reviews • Change: • New issue review board (greater oversight) • Independent validation contractor • Annual accuracy rates for each RAC • Concern: The RAC program was not transparent enough • Change: • New issues posted to web • Vulnerabilities posted to web • RAC claim status website 9

10. RAC Expansion Schedule A D B Oct. 1, 2008 March 1, 2009 Aug. 1, 2009 or later C

11. Key Website & Contact Information www.cms.hhs.gov/RAC RAC@cms.hhs.gov 11

12. Provider Feedback Questions • How would you (providers) like to learn about the Recovery Audit Contractor program? What is the best vehicle for reaching and providing outreach to providers? • How would you (providers) like to learn about vulnerabilities identified by a Recovery Audit Contractor? What format will help you in your practice or facility? (These are vulnerabilities that have been identified in a large scale. These are not specific findings for a single facility. Specific findings will be communicated through written correspondence.) • All Recovery Audit Contractors will develop a web-based tracking system to allow providers to track claims requested by a RAC. What information should the RACs include in this system? Please keep in mind that Personal Health Information (PHI) cannot be included.