Handling a RAC audit

Legally Speaking

Clifford Warren Lober

Dr. Lober is a dermatologist in practice in Florida and a partner in the law firm Lober, Brown, and Lober.

Bookmark and Share

It’s Monday morning and Bryan arrives in his office to find Rebecca waiting at his doorstep. He opens the door and greets her.

Bryan: Hi, Rebecca! It’s good to see you again. How is everything going?

Rebecca: Not well, Bryan. I just received a letter from Recovery Systems requesting that I send them copies of the medical records of 10 patients for review. They said they were the recovery audit contractor (RAC) for our area. What is this all about? Do I have to send them the records?

Bryan: Yes, subject to several limitations. First, there is a limit to the number of records they can request. Since you are a solo practitioner, they can only request 10 records in any 45-day period. Secondly, they cannot request records that are over three years older than the date of the initial determination of the claim — the date the Medicare carrier decided whether to pay the claim (not the earlier date of service). Furthermore, the request must be for “good cause,” such as the result of an investigation by Office of the Inspector General, data analysis findings, or a comparative billing analysis. The auditors are strictly prohibited both by the act establishing the RAC audit system and the CMS Statement of Work (their contract with CMS) from using random claim selection to go on a fishing expedition. They are also contractually prohibited from selectively reviewing high-dollar claims solely because they are high-dollar claims.

Rebecca: What is the RAC looking for?

Bryan: RAC auditors are looking to determine compliance with national and local Medicare coverage guidelines. The RACs cannot review charts to determine compliance with these policies unless either CMS or its outside validation contactor agrees that there is reasonable cause to suspect that providers are not complying with a particular Medicare coverage determination. The RACs must list the policies they have been approved to review on their websites.

Rebecca: Should I send anything with the medical records?

Bryan: Yes. Review the requested records and the relevant Medicare coverage policies to be certain that you are in compliance. All national and local coverage determinations are readily available on the Internet. Although it is not required, I suggest sending a cover letter describing how each of the claims is consistent with the relevant coverage policy. You want to make it obvious to the auditor that you are in compliance.[pagebreak]

Rebecca: Is there anything else I should do?

Bryan: It depends upon what the RAC determines. Although the majority of their analyses result in a request for overpayment for which they receive a contingency fee, they also receive the same fee if they determine that you were underpaid.

Rebecca: I understand that there is more than one type of RAC audit. Is that correct?

Bryan: Yes, Rebecca. An automated review is done by computer and is based solely on the information submitted on your claims. It is useful in identifying improper payments, such as duplicate billing or non-covered services. A complex review requires the RAC to request records for manual review. It is far more expensive and time consuming for the RAC than an automated review. Since the RAC has requested medical records from you, a complex review is being done.

Rebecca: Who will contact me if the RAC determines that I was overpaid?

Bryan: Your local Medicare administrative contractor will notify you of the amount due and your appeal rights.

Rebecca: What should I do if they request that I refund an “overpayment?”

Bryan: You have 40 days after you receive a demand letter following a complex review to ask for a discussion with the individual who reviewed the charts. This request should be made in writing and sent by certified mail. If you ask, the RAC must tell you the credentials of the reviewer. If you want to speak with the medical director of the RAC, that director must participate in the discussion. Be very clear, however, that the discussion period is not the same as an appeal and will not preserve your appeal rights. It will, however, give you an opportunity to clarify your evaluation and treatment with the auditor, which may help you achieve a more favorable result.

Rebecca: Should I also file an appeal?

Bryan: Unless there was an obvious error on your part, such as inadvertent double billing, once you have reviewed the medical records and are sure you are in compliance with relevant national or local Medicare coverage determinations, I would certainly advise you to appeal if a refund is requested. You have 120 days to file the initial appeal, which should be sent by certified mail to your local Medicare carrier. You may provide additional information or clarification at this time. There is no requirement that a minimum amount be due to request an initial appeal. Specific instructions on how to appeal will be sent with the letter demanding your refund.[pagebreak]

Rebecca: Do I have to pay interest on the “overpayment” while it is appealed?

Bryan: If you do not remit the amount due when requested, interest begins to accrue on the 31st day. Your Medicare carrier will begin to recoup the alleged “overpayment” from money Medicare pays you on the 41st day unless you have filed an appeal in the first 30 days. If your appeal is successful, any amount you have paid, including interest, will be refunded.

Rebecca: Is there only one level of appeal?

Bryan: No! Should your initial appeal not succeed, you may appeal to a Qualified Independent Contractor, then to an administrative law judge, the Medicare Appeals Council, and finally to a federal court. At each step you will be informed of your appeal rights as well as the requirements and process for further appeals.

Rebecca: If I want your continued assistance with this matter, will my insurance company cover your legal fees?

Bryan: Your medical malpractice insurance may provide limited coverage for regulatory compliance issues, such as a RAC audit. Hopefully, however, you purchased the regulatory issues coverage I suggested last year.

Rebecca: I did, Bryan. I really appreciate your help and will follow your advice.

Bryan: Excellent! Please keep me informed as this as this audit goes forward. I’m here for you.

Note: CMS has temporarily halted the initiation of new “complex” RAC audits. Automated audits (not requiring medical record documentation) will continue through June 1 and RAC auditors will complete “complex” reviews in progress based upon documentation requests sent as of Feb. 28, 2014. CWL

If you have any suggestions for topics to be discussed in this column, please e-mail them to me at loberc@gmail.com. See the February 2013 issue of Dermatology World for disclaimers. 

 

Related Resources

Key points