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National Healthcare Compliance Audioconference:

Medicare RAC Audit Update

Don MayAmerican Hospital Association

May 13, 2008

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CMS ViewCMS ViewFY 2007 RAC Performance: FY 2007 RAC Performance:

Overpayments Collected: $357.2mLess Underpayments Repaid: - ($14.3m)

Less $ Overturned on Appeal:

- ($17.8m)

Less Costs to Run Demo: - ($77.7m)

BACK TO TRUST FUNDS $247.4 m

$$??

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• Hospitals strive for accuracy in service, billing, and coding

• Hospitals support program integrity efforts

• Lot’s of overlap by auditors• RACs’ bad behavior unacceptable

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Medicare coding problems and providing unnecessary care (wrong setting) were

the key target areas of RACs

SOURCE: Self-reported by RACs

17%Other

9% No/Insufficient Documentation

32%Medically

Unnecessary

42%Incorrect Coding

??

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43.4%

Percent of Hospital FY 2007 Revenue Impacted by RACs

0%

10%

20%

30%

40%

50%

60%

70%

80%

No Offsets 0% to 2.5% 2.5% to 5% 5% to 10% > 10%

New York

Florida

California

60.4%

23.2%

31.8%

5.0% 1.4% 1.4%

70.4%

2.0% 0.5%3.9%

25.0%

5.2% 7.0%

18.2%

SOURCE: CMS 2007 RAC Status Report

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CMS Has Responded to Some Concerns

RAC Program Improvements• No Contingency Fee when Denial is Overturned at

Any Level of Appeal • Required to Have a Medical Director• 3-year Look-back Period for Review • No claims with a payment date prior to October 1,

2007 will be reviewed, regardless of the actual start date for the RAC in a state.

• Use of Staggered Expansion of RACs• Limits on the Number of Medical Records a RAC can

Request per Month• Requirement for a Web-based Application by January

1, 2010 • No funds recouped during first 2 stages of appeals

process, IF denial appealed within 30 days

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• Work with CMS for more RAC program changes

• Push Congress for legislative relief– Advocacy – STOP and Fix-it– Capps-Nunes legislation (HR 4105)

• Member Education– Collaboration and education with state

hospital associations– Member advisories and education

sessions – RACTrac: Collect data and examples of

egregious behavior

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The Medicare Recovery Audit Contractor Program Moratorium Act of 2007

HR 4105Rep. Lois Capps (D-CA) Rep. Devin Nunes (R-CA)

• 77 co-sponsors• 1-year Moratorium• CMS Report• GAO Study

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STOP and Fix-itSTOP and Fix-it• Slow down• Reduce or remove contingency

method of payment• Exclude medical necessity from

RAC review• Reduce look-back to 12 months• Centralized electronic tracking

platform of RAC denials and appeals • Exemption from “timely billing” rules• Improved CMS management and

transparency of RAC program• Bigger focus on UNDERpayments

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• Establish internal RAC team • Interdisciplinary Team: Coders, Finance, Clinical, Utilization Review,

Case Management• Identify RAC point of contact for internal and external

RAC communications• Develop a central tracking mechanism for all RAC

correspondence• Incoming and Outgoing

• Conduct a self audit to identify potential problems• Participate in RAC trainings