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    Recovery audits require a new coding mindset

    RAC program is rolling out nationally, with contractors searching for overpayments


    Ray Painter, MD
    With a new Medicare audit program set for national rollout, urologists should keep the old W.C. Fields quote in mind: "Trust everyone, but cut the cards." The program will require you to begin thinking in a different, somewhat defensive way about coding and billing. Learn the details of current rules, be aggressive in charging for all services according to the rules, and be prepared to pay back some money in the future for any overpayment. There is no penalty and no interest charged when you are asked to pay the money back.

    Mark Painter
    We have always maintained that the fact that you have been paid doesn't mean that you were paid correctly. If your request for payment meets the criteria for payment, as programmed into the payer's computer, you will almost always be paid, without any question. However, Medicare and private payers reserve the right to audit your documentation at any time in the future and ask for their money back if they disagree with the payment.

    Medicare insists on paying exactly the contracted amount for medically necessary, properly documented covered services. The Centers for Medicare & Medicaid Services has page after page of regulations detailing coverage issues and circumstances under which services are covered. These regulations change yearly.

    The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Section 306) directs the Secretary of the U.S. Department of Health and Human Services to demonstrate the use of Recovery Audit Contracts (RAC) under the Medicare Integrity Program to identify underpayments and overpayments and recoup overpayments under the Medicare program for services for which payment is made under Part A or Part B of Title XVIII of the Social Security Act.

    When we refer to overpayment, we are not talking about intentional fraud. We are referring to overpayment due to a difference in interpretation of the rules, a mistake in payment by the payer, a wrong code for the service, etc.

    Implementation of RAC

    The program started as an experiment in California, New York, and Florida, in which RAC companies were hired to find payments made by the Medicare carrier that should not have been made. RAC payments are made based on percentage of identified and corrected payments. The payer makes final determinations of all corrections to payment. These companies collected $371.5 million from improper Medicare payments in 2007. Based on the success of the program, Congress voted to maintain the law, which allows expansion of the program to all 50 states by 2010.

    Permanent RAC expansion schedule
    CMS has divided the country into four RAC jurisdictions, each identified by its own letter (see map). Implementation dates for the program vary within these jurisdictions. There is a blackout date for all RAC activity during the MAC transition. The additional states to be implemented first are those in which the MAC contracts have been let and are being implemented.

    The RAC is a program that hires what amounts to a "bounty hunter" to find any overpayments and underpayments that have been made on behalf of the Medicare program. These contractors are using benchmarking data to determine where there might be an overpayment or underpayment. All identified potential payment errors then must be evaluated by review of documentation. Once confirmed by review, the results are presented to the Medicare carrier, who is responsible for collecting or refunding the money identified by the RAC. Physicians are provided the opportunity to protest findings.

    RACs are authorized to review payments for the previous 4 years. The software they use is more capable of picking up overpayments than it is underpayments. This discrepancy is borne out by a CMS report showing that 97% of improper payments in fiscal year 2006 were overpayments, and only 3% were underpayments. No money has been reported as having been returned to physicians because of underpayment.


    Mark Painter
    Mark Painter is CEO of PRS Urology SC in Denver.
    Ray Painter, MD
    Urologist Ray Painter, MD, is president of Physician Reimbursement Systems, Inc., in Denver, and is also publisher of Urology Coding and ...


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