The CMS announced that it will commence the Recovery Audit Contractor (RAC) program after settling protests filed by two unsuccessful bidders of the RAC program contracts. As discussed by CMS's Marie Casey at a recent American Health Lawyers Association meeting, there have been several changes made to the RAC program in an effort to make the program more transparent and accurate and less of a burden on providers. The significant changes to the RAC program include:

  • Limiting the "look-back" period to three years with the maximum look-back date of October 7, 2007;
  • Accepting imaged medical records from providers on CD/DVDs in lieu of paper records;
  • Limiting the number of medical records that are requested for review (e.g., for inpatient hospital claims, the number of records are limited to 10 percent of average monthly Medicare paid claims per 45 days with a maximum of 200 medical records per 45 days);
  • Requiring each RAC to employ a medical director who is a physician and certified coders to ensure that the audits are completed accurately;
  • Requiring the RAC to return its contingency if a provider contests a RAC audit and the RAC loses at any level of the appeal; and
  • Posting new issues targeted by the audits on the RAC's website to allow for more transparency.

In order to prepare for the implementation of the permanent RAC program, Casey advised providers to conduct their own internal reviews to determine if they are compliant with Medicare rules, track denied claims and implement procedures to avoid improper payments. For more information about the RAC program, see here.