There are only three scenarios in which a Medicare Recovery Audit Contractor can utilize an automated review to determine if a claim paid to your practice was an overpayment. If you know what these three scenarios are, your practice can better predict the likelihood of Medicare RAC auditors sending a demand letter to your mailbox.
According to the Centers for Medicare and Medicaid (CMS), a Recovery Audit Contractor may demand repayment of a claim without reviewing your medical records in the following situations:
- A statute, regulation, or national or local coverage determination rules reimbursement for a service will always be an overpayment.
- The service is found to be a medically unnecessary service.
- Your practice fails to respond timely to a demand letter requesting medical records.
With these three scenarios being known, you can perform a pre-audit within your practice to identify any areas of risk that might throw up a red flag if an automated review is performed on your data The key to remember is that CMS has sent Medicare claims data from October 2007 to February 2009 to the Recovery Audit Contractor (RAC) that is covering your region for data mining purposes. The RACs have the ability to analyze this data and look for over-payments without requesting any medical records from your practice.
It’s a good idea for your practice to be prepared and identify any over-payments before a RAC identifies them and sends you a demand letter. A pre-audit will help you identify any areas where your practice is making mistakes (i.e. medical necessity, duplicate services billed, etc.). Wen you conduct your internal pre-audit, its a good idea to look at billing data that falls in the same date range mentioned above as this is what the RACs will be reviewing with their data mining software.
To get an idea of how to conduct your internal audit and what to look for, review the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) Work Plan and review the RACs website that is covering your geographic region.
Hiring a third party audit firm may be a good idea if you do not have staff on hand that have the credentials to conduct a thorough audit. The cost of hiring a third party will be more than worth the benefit of avoiding any serious fines or penalties as a result of RACs finding overpayments in your practice. The ability to receive qualified training is also critical so that any errors or mistakes identified can be corrected moving forward.
If a RAC does request medial records from your practice and you fail to respond within the required time frame, the claims in question will automatically be classified as improperly paid and you’ll receive a demand letter for the full amount of the claim. During the initial three year demonstration conducted by CMS, “a significant amount” was collected by RAC just for non-response from the organization being audited.
If during an automated data review a RAC finds an underpayment, they will notify your Medicare Part B carrier and if your carrier agrees with the finding, it will correct the claim and issue you an additional payment.