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Preparation and understanding- Educate yourself about Medicare recovery audits and audit contractors, Medical News, June , 2010

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Medical News, June 2010
By Christopher J. Shaughnessy

In the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Congress instructed the U.S. Department of Health and Human Services ("HHS") to establish a demonstration project utilizing Recovery Audit Contractors ("RACs") to conduct audits of Medicare providers to identify and recover overpayments. In the Tax Relief and Health Care Act of 2006, Congress made the RAC program permanent.

In constructing the permanent RAC program, the Center for Medicare and Medicaid Services ("CMS") divided the country into four regions, with one RAC for each region. The RACs are paid on a contingency basis, and thus have a very strong incentive to audit providers and pursue the recovery of alleged Medicare overpayments. Kentucky and Indiana fall within Region B of the RAC program. CGI Technologies and Solutions, Inc. currently functions as the Medicare RAC for Region B.

Two Types Of Audits

The RACs are specifically authorized to conduct two types of claim reviews: automated reviews and complex reviews. Under an automated review, the RAC makes a determination utilizing computer programs to identify errors without reviewing medical records. In order to issue a denial determination based on an automated review, there must be a certainty that the item or service is not covered or is incorrectly coded.

Under a complex review, the RAC makes a determination based upon a review of medical records related to the claim. Complex reviews must be utilized when it is likely, but not certain, that an item or service is not recorded, or there is not a Medicare policy or coding guideline governing the claim. The RAC must complete a complex review within 60 days of receipt of the medical records requested from the provider, and the RAC must disclose the credentials of the individuals making the review determination. The RAC must also make its medical director available to discuss a claim denial at the provider's request.

The Appeals Process

There are five levels of appeal of a RAC's initial overpayment determination. The first stage of appeal is redetermination. A provider has 120 days to file a request for redetermination with the RAC. However, in order to prevent recoupment of the alleged overpayment, the request for redetermination must be filed no later than 30 days after the date of the RAC's written demand for repayment. After the RAC renders its redetermination decision, a provider may file a request for reconsideration within 180 days after receiving the RAC's redetermination decisions. The request for reconsideration must be filed with QIC within 60 days of the redetermination decision in order to prevent recoupment of the alleged overpayment. Importantly, the provider must submit all relevant evidence in support of the appeal at the reconsideration level, or it will be precluded from introducing additional evidence at later stages of the appeal process unless good cause is shown.

Within 60 days after the QIC renders its decision, the provider may request a hearing before an Administrative Law Judge ("ALJ"). After the ALJ renders a decision, the provider may file an appeal with the Medicare Appeals Council within 60 days of the date of the ALJ's decision. The provider may appeal the decision of the Medicare Appeals Council to United State District Court. The appeal to United States District Court must be filed within 60 days of the date of the Medicare Appeals Council's decision.

If providers are aware of the RAC process and the issues on the RAC radar screen, they will be able to address RAC audits effectively and exercise their appeal rights successfully.

Preparation Tips for RAC Audits

In preparing to deal with RAC audits, providers should take the following steps:

Christopher J. Shaughnessy is a member of McBrayer Law. Mr. Shaughnessy concentrates his practice in healthcare law and is located in the firm's Lexington office. He can be reached at cshaughnessy@mcbrayerfirm.com or at 859-231-8780, ext. 1251.

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