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Medicare Recovery Audit Program

Big changes on the horizon for healthcare auditing

The Recovery Audit Contractor procurement process has come to an end as the Centers for Medicare and Medicaid (CMS) recently awarded new recovery audit contracts. The awards have been held up since 2014 because of post-award protests. The various challenges and delays resulted in a temporary break in recovery audits for providers. It also allowed CMS to identify program improvements to address some of the concerns of the provider community. CMS is confident that these changes will result in a more efficient and effective program as they continue to look at minimizing provider burden. 

Since the inception of the recovery audit program providers have felt they were at a disadvantage and at the mercy of the auditor. CMS was receptive to these concerns and continues to work on improving program transparency. Some of the changes providers can expect:

• CMS will establish a provider relations coordinator that will be responsible for efficiently resolving issues encountered by the provider; this provider coordinator also will provide a single point of contact for provider concerns. Providers have previously expressed a concern with not knowing who to contact if they have an issue with a contractor. Having a designated provider relations person will eliminate some of the provider frustration.

• CMS will require recovery auditors to consistently provide detailed information about new RAC issues on their websites. Providers should be able to access the contractor's website to review detailed information about current issues. Having access to this information will enable the provider to review and revise billing processes to ensure that they are billing in compliance with Medicare rules, have the necessary supporting documentation and mitigate potential post-payment audits.

A major concern among providers was the manner in which recovery auditors were reimbursed for their auditing services. Providers felt that the contractors were incented to audit a high volume of high-dollar claims as they were reimbursed on a contingency fee basis immediately upon denial. Providers also believe that this contributed to a high number of false denials, leaving the provider with the option of appealing the decision, which can be a lengthy process, or returning monies that had been previously paid.

SEE ALSO: Healthcare Consumerism and Payer-Provider Relationships

Once the new contracts are awarded, recovery audits will not receive their contingency fee until after the second level of appeal is completed. This revised reimbursement schedule, coupled with the requirement to maintain a 95% accuracy rate, will help eliminate any erroneous denials for providers. Additionally, recovery auditors must maintain an overturn rate of less than 10% at the first level of appeal. Failure to do so will result in corrective action plans for the recovery auditor.

Additionally, CMS will be adding a fifth recovery auditor that will focus on durable medical equipment, home health and hospice recovery audits. While these groups are not strangers to RAC audits, they may see an increase in audit activity. Revised ADR limits that incrementally apply will enable these providers time to accommodate medical documentation requests and adjust staffing levels as they are introduced to the new process. 

While RAC audits can impose a tremendous administrative burden on a practice and can have a negative financial impact the organization, developing a plan to manage the audit process can prove to be very beneficial for providers. A process that has been largely paper-based has implemented changes in the past couple of years to streamline the audit submission process. With contractors issuing more than 2 million requests annually, CMS recognized a need to develop an electronic process.

The Electronic Submission of Medical Documentation (esMD) program was developed by CMS as part of its strategic plan to transform business operations and uphold their commitment to modernize business processes, streamline medical documentation submissions and sustain enrollment gains in the Medicare program.

At the height of the recovery audit program, providers were burdened with overwhelming costs of printing, mailing and tracking of documentation to Medicare contractors. With the launch of esMD, providers are able to securely and electronically respond to documentation requests eliminating all paper- and manual-based processes and saving thousands of dollars annually. Adopting the electronic esMD process can significantly improve response times and streamline audit processes. 

With the return of the recovery audits on the horizon, providers should use this time to review their internal processes for handling audits, closely monitor regulatory requirements and changes in compliance policies and procedures to develop best practices for their audit program. While changes may continue, all signs indicate that the recovery audit program is here to stay. Therefore, having a solid plan with proven best practices will minimize the administrative burden.

Nicole Smith is vice president of operations and government services at NEA.

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