The RACs use automated review for claims that clearly contain errors resulting in improper payments (e.g., claims for duplicate or uncovered services, or which violate a written Medicare policy or sanctioned coding guideline), in which case the RAC notifies the provider of the overpayment amount. Where there is a high probability (but not certainty) that the claim contains an overpayment, the RAC requests medical records from the provider (including imaged medical records on CD or DVD) to conduct a complex review and make a determination as to whether payment of the claim was correct or whether there was an overpayment or an underpayment.
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Explore This IssueDecember 2009
As of the end of October 2009, all four RACs have the ability to begin reviewing claims, while they are realistically expected to ramp up their activities in all states some time in 2010, says Connie Leonard, director of CMS’s Division of Recovery Audit Operations. The RACs are going to start with automated review, then move into diagnosisrelated group validation, complex review, and eventually medical necessity cases, says Leonard.
When overpayments are confirmed, the RACs issue letters demanding repayment in 30 days, while the provider’s Medicare carrier or intermediary performs the collection. For confirmed underpayments, RACs inform the carrier or intermediary who then forwards the additional payment to the provider.
CMS is using a Web-based data warehouse to ensure that RACs do not review a claim that had previously been reviewed by another entity, such as a Medicare carrier, fiscal intermediary, Office of Inspector General, or Quality Improvement Organization (QIO).
Providers can repay an overpayment by check (or installment plan) on or before 30 days after receiving the RAC demand letter. Medicare contractors (who make the actual claim adjustments) use recoupment—reducing present or future Medicare payments—on Day 41. Physicians who wish to dispute overpayment charges take their cases through the usual Medicare claims appeal process.
If physicians disagree with the RAC’s determination, Leonard explains, they should either 1) pay by check by Day 30 and file for appeal by Day 120 of the demand letter; 2) allow recoupment on Day 41 and file for appeal by Day 120; 3) stop the recoupment by filing an appeal by Day 30; or 4) request or apply for an extended payment plan and appeal by Day 120.
RACs also offer a “discussion period” from the date providers get a detailed review results letter until the date of recoupment for providers to discuss with their RAC an improper payment determination outside the normal appeal process. RACs are required send the detailed review results letter to providers following all complex reviews within 60 calendar days of the receipt of the medical records, alerting the physician that there is an improper payment and they are going to get a demand letter, says Leonard. “The physician will usually get two letters: the detailed review results letter saying the RAC reviewed the claim and found improper payment for these specific reasons, and then they’ll get a demand letter indicating the amount of overpayment, and the physician’s appeal rights. The amount of time between those two letters depends on the backlog of cases at the contractor level—it could be 30 to 60 days. So physicians are going to know a little bit before that demand letter that there’s an improper payment,” notes Leonard.