Rheumatologists should prepare their practices now for the Recovery Audit Contractor (RAC) program, being rolled out nationwide by the Centers for Medicare & Medicaid Services (CMS) as part of its arsenal to identify and correct improper payments and prevent fraud, waste, and abuse in the Medicare system.
Anyone who bills Medicare fee-for-service is open to a RAC audit. A three-year demonstration of the RAC program that ended in March 2008 heavily targeted codes used by rheumatologists—those used for injectable drugs, in particular—while three of the four RACs in the permanent nationwide program indicate that they will target IV hydration therapy, which is billable only for one unit per patient per date of service.
Some physicians in the demo regarded the thirdparty RAC companies as “bounty hunters” (it was the first time the Medicare program had paid contractors on a contingency- fee basis) operating without sufficient CMS oversight, imposing undue administrative burdens on physician practices, and lacking clinical expertise to adjudicate claims appropriately. CMS says it has modified the permanent program to address those flaws and ensure a fair and smooth auditing process. Rheumatologists can make specific preparations that allow them to respond to audits with minimal disruption to their practices, minimize recoupment disputes, and perhaps even avoid being audited in the future.
Program Rationale and Process
Out of concern that the Medicare Trust Funds may not be adequately protected against improper payments by existing error detection and prevention efforts, Congress directed CMS to use RACs to identify and recoup Medicare overpayments under Section 306 of the Medicare Modernization Act of 2003, and directed CMS to make the program permanent and nationwide by 2010 under Section 302 of the Tax Relief and Health Care Act of 2006. According to the CMS, RACs were implemented so that physicians and other providers can avoid submitting claims that do not comply with Medicare rules, CMS can lower its error rate, and taxpayers and future Medicare beneficiaries are protected.
CMS has contracted with four regional RACs for the permanent nationwide program, and each will use proprietary auditing software to review paid claims from Medicare Part A and B providers to ensure that they meet Medicare statutory, regulatory, and policy requirements and regulations. CMS will pay RACs on a contingency fee basis (i.e., they retain a portion of the monies recovered) on overpayments and a percentage basis for all underpayments they find. (The new national RACs can be found at www.cms.hhs.gov/RAC.)