CMS Says RAC Reform Has Eased Provider Burden

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In a Centers for Medicare and Medicaid Services (CMS) blog post on May 2, Administrator Seema Verma reported that "meaningful changes" in the Recovery Audit Contractor (RAC) program has reduced provider burden and appeals and increased program transparency while enhancing program oversight and effectiveness. Acknowledging complaints from providers that the audits were time-consuming, necessitated high administrative expenses, and often required lengthy appeals, Verma said that complaints about RACs have decreased. In particular, the American Hospital Association (AHA) found that 60 percent of claims reviewed by RACs in the third quarter of 2016 did not have an overpayment. In addition, hospitals appealed approximately 45 percent of all RAC denials.

In the blog post, Verma wrote that in FY 2018 the program identified approximately $89 million in overpayments and recovered $73 million.

Verma listed examples of the key improvements and enhancements made to the program:

Better Oversight of RACs

·        RACs must maintain a 95 percent accuracy score or receive a progressive reduction in the number of claims they can review.

·        RACs must maintain an overturn rate of less than 10 percent or receive a progressive reduction in the number of claims they can review.

·        RACs will not receive a contingency fee until after the second level of appeal is exhausted. Previously, RACs were paid immediately upon denial and recoupment of the claim. This delay in payment helps assure providers that the RAC's decision was correct before they are paid.

Reducing Provider Burden and Appeals

·        RACs must audit proportionately to the types of claims a provider submits. Previously, RACs could select a certain type of claim to audit.

·        RACs will conduct fewer audits for providers with low claims denial rates.

·        Providers have more time to submit additional documentation before needing to repay a claim. The 30-day discussion period after an improper payment is identified, means that providers do not have to choose between initiating a discussion and filing an appeal. CMS expects this will continue to reduce the number of appeals.

Increasing Program Transparency

·        CMS is regularly seeking public comment on newly proposed RAC areas for review, before the reviews begin. This allows providers to voice concerns regarding potentially unclear policies that will be part of the review.

·        The RACs enhanced their provider portals to make it easier to understand the status of claims.

To prevent future improper payments, CMS started using findings from the Medicare Fee for Service RACs to implement local and/or national changes. By denying improperly billed services or by returning claims to the provider, providers can make corrections and resubmit the claim for payment.