RECOVERY AUDIT CONTRACTORS and MEDICARE AUDITS
providers and suppliers the types of claims they will be reviewing. In the demonstration program, the “targeted review” resulted in certain categories of providers being subject to larger volumes of record requests and corresponding claim denials than other provider types (e.g. Inpatient Rehabilitation Facility providers were subject to very high volumes of record requests and received numerous claim denials).
CMS compensates the RACs on a contingency fee basis, based upon the principal amount of collection (or the amount paid back to) a provider. This fee arrangement provides incentives to the RACs to aggressively review and deny claims, including claims that the RAC alleges to be not “medically necessary,” an area containing much subjectivity, and a category of denial often highly disputed by the provider. As noted above, in FY 2007, the RACs identified and collected 7.2 million in overpayments, and repaid just .3 million in identified underpayments to Medicare providers and suppliers. Thus, approximately 96 percent of the alleged improper payments identified (and collected or returned as appropriate) were overpayments, as opposed to underpayments. However, in a significant change from the demonstration program, under the permanent RAC program, if a provider files an appeal disputing the overpayment determination, and provider wins this appeal at any level, the RAC is not entitled to keep its contingency fee, and must repay CMS the amount it received for the recovery.
Medicare providers and suppliers nationwide are well advised to begin preparing for the RACs and increased Medicare auditing activity now. Although providers cannot stop RAC audits from happening, radiology providers can begin to prepare by dedicating resources to:
Internally monitoring protocols to better identify and monitor areas that may be subject to review;
Responding to record requests within the required timeframes;
Implementing compliance efforts, including but not limited to, documentation and coding education. Notably, in addition to claim denials resulting from medical necessity and improper documentation and coding, it also is possible to receive claim denials if services are not provided consistently with Medicare regulations. Therefore, radiology providers should ensure that the services provided are appropriately documented and coded, and also ensure that the provider is compliant with Stark, the Anti-markup rule, the teleradiology rules, and the corporate practice of medicine doctrine, among other rules; and
Properly working up appeals to challenge denials in the appeals process. With regard to medical necessity and similar denials, this will clearly entail physician involvement, which many non-physician providers and suppliers find difficult to obtain.
III. MEDICARE AUDITS – The Medicare Appeals Process
If a Medicare provider or supplier receives a claim denial or a finding of overpayment is made as a result of a RAC review, the denial will be subject to the standard Medicare appeals process. The regulations governing the uniform Medicare Part A and Part B appeals process are contained in 42 C.F.R. Part 405, subpart I.
Stage 1: Redetermination
The first level in the new appeals process is redetermination. Providers must submit redetermination requests in writing within 120 calendar days of receiving notice of initial determination. There is no amount in controversy requirement.
Stage 2: Reconsideration
Providers dissatisfied with a carrier’s redetermination decision may file a request for reconsideration to be conducted by a Qualified Independent Contractor (QIC). This second level of appeal must be filed within 180 calendar days of receiving notice of the redetermination decision. There is no amount in controversy requirement.
Of particular note, providers must submit a full and early presentation of evidence in the reconsideration stage. When filing a reconsideration request, a provider must present evidence and allegations related to the dispute and explain the reasons for the disagreement with the initial determination and redetermination. Absent good cause, failure of a provider to submit evidence prior to the issuance of the notice of reconsideration precludes subsequent consideration of the evidence. Accordingly, providers may not be permitted to introduce evidence in later stages of the appeals process if such evidence was not presented at the reconsideration stage.
If an initial determination involved a decision regarding the medical necessity of an item or service, the QIC’s reconsideration must involve consideration by a panel of physicians or appropriate healthcare professionals, and must be based on clinical experience, the patient’s medical records, and medical, technical, and