RACs’ Limited Restart and Partial Payment Window Opens

Posted on September 15, 2014 I Written By

The following is a guest blog post by Dawn Crump, VP of Audit Management Solutions at HealthPort.
Dawn Crump - HealthPort
The RACs are back and they’re offering acute care and critical access hospitals a sweet deal—at least for now.

The Recovery Audit Contractor (RAC) program had been on hold due to the reassigning and re-contracting of regions. In addition, there was a lawsuit pending between Centers for Medicare and Medicaid Services (CMS) and CGI over RAC reimbursement rates, models and approaches. The lawsuit was resolved in August. But CGI quickly appealed causing further delay in full resumption of the RAC program.

So while everyone awaits another court decision and green light from CMS, two important RAC announcements were made by CMS.

  • A “limited” restart of the RAC program began in August, 2014, including a restricted number of claim reviews and service targets.
  • Some claims currently pending appeals of inpatient-status claim denials by RACs may be eligible for a partial payment settlement.

Limited Restart Underway

Until the RAC program is 100 percent back in session, some reviews will be conducted. These will be mostly automated reviews, but there will be some records requests and a limited number of complex reviews in certain select areas. During the restart, RACs will not review claims to determine whether the care was delivered in the appropriate setting. CMS said it hopes that the new RAC contracts will be awarded later this year.

From the Aug. 5 edition of the American Hospital Association’s News Now: “CMS will allow current RACs to restart a limited number of claim reviews beginning this month. The agency said most reviews will be done on an automated basis. However, a limited number will be complex reviews on certain claims, including spinal fusions, outpatient therapy services, durable medical equipment, prosthetics, orthotics and supplies, and Medicare-approved cosmetic procedures.

One example of the latter is blepharoplasty, also known as an eyelid lift. The number of claims for this procedure has tripled in recent years, so I expect the RACs will make this procedure a hot target. To be covered under Medicare, vision must be impaired. What’s needed? Physician documentation of the reasons for surgery (e.g., eyelid droop interfering with vision).

Here are three specific steps to take with regard to the limited RAC restart:

  • Stay abreast of all RAC news and announcements and remain diligent in communicating with your regional peers regarding new RAC region assignments, contacts and educational opportunities.
  • Conduct an internal probe to ensure you’re following all of Medicare’s National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs).
  • Educate coders, billers and physicians around documentation, coding and billing for specific targets as mentioned above.

But the limited restart wasn’t the only important news.

Partial Repayment Deal Announced

In their September 9th, 2014 inpatient hospital reviews announcement, CMS announced an administrative agreement for acute care and critical access hospitals.  To reduce the backlog of cases in appeal status and overall administrative costs, these hospitals now have the option to withdraw their pending appeals in “exchange for timely partial payment (68% of the allowable amount)”, according to the CMS administrative agreement.

Of course there are parameters to understand and details to sort out regarding the settlement opportunity. Here is what we know so far:

  • Only acute care and critical access hospital claims are eligible.
  • Claims must already be in the appeals process for inpatient-status claims with an admission date prior to October 1, 2013.
  • Services might have been found reasonable and necessary by the Medicare contractor, but treatment as an inpatient was not.
  • Hospitals may choose to settle some claims and continue to appeal others.
  • Hospitals should send their request for settlement to CMS by October 31, 2014.

Many more details are available on the CMS.gov website.

Settle….Or Not?

Eligible hospitals must determine if requesting a settlement offer makes sense for cases in appeal that meet the specified parameters. For some cases, it will make sense to take the 68 percent settlement and cut your losses. For other denials, waiting out the appeal process may be a better choice.

Each denial will be different and each case unique. Time, money and resources must be balanced against the potential revenue retained or returned potential. Audit management directors, in conjunction with their revenue cycle and finance teams, must analyze RAC data for each eligible case.  It’s a complicated equation. And with a deadline of October 31, 2014, there is no time to lose.

About Dawn Crump

Dawn Crump, MA, SSBB, CHC, has been in the healthcare compliance industry for more than 18 years and joined HealthPort in 2013 as Vice President of Audit Management Solutions. Prior to joining HealthPort, Ms. Crump was the Network Director of Compliance for SSM. She is a former board director of the Greater St. Louis Healthcare Finance Management Association chapter and currently serves as the networking chair.