Medicare announces new RAC audits

May 13, 2013
Area(s) of Interest: Scope of Practice 

The Recovery Audit Program (RAC), mandated by the Tax Relief and Health Care Act of 2006, detects and corrects past improper payments on behalf of Medicare. The identification of incorrect payments allows the Centers for Medicare and Medicaid Services (CMS), Medicare claim processing contractors and providers to implement corrective actions to prevent future improper payments.

Health Data Insights (HDI) is the RAC for California. In the past six months, it has added additional audits to its scope of services. The following are a sampling of those recently added audits that will are more likely to affect physicians in California.

Audit Type


Excessive Units of Ultrasound Guidance - J1

CMS developed Medically Unlikely Edits (MUEs) to reduce the paid claims error rate for Part B claims. An MUE for a HCPCS/CPT code is the maximum units of service that a provider would report under most circumstances for a single beneficiary on a single date of service. Based on the MUE Table for Practitioner Services, CPT Code 76942 (Excessive Units of Ultrasound Guidance) is to be reported only once per beneficiary per date of service.

Ventilator Management Billed with E&M Services - J1

Ventilator Management services are not separately reportable with evaluation and management (E&M) CPT codes. If an E&M code and a ventilation management code are reported, only the E&M code is payable.

Incorrect Billed Drug and Biological HCPCS Code - Underpayments

Providers are required to report appropriate HCPCS codes for the drugs and biologicals administered and billed. Medical documentation will be reviewed to determine that the appropriate HCPCS code was billed. (At this time, medical necessity will be excluded from this review.)

Medically Unlikely Billed Doses of Drugs & Biologicals - Underpayments

Drugs and biologicals should be billed in multiples of the dosage specified in the HCPCS code descriptor. The number of units billed should be assigned based on the dosage increment specified in that HCPCS long descriptor, and correspond to the actual amount of the drug administered to the patient, including any appropriate, discarded drug waste. If the drug dose used in the care of a patient is not a multiple of the HCPCS code dosage descriptor, the provider rounds to the next highest unit. Drug waste should be coded and documented according to the requirements of the local contractor. Claims billed with units below the approved compendia diagnosis specific dosing guideline minimums will be reviewed to determine the correct number of billable/payable units.

If an improperly paid claim is identified through one of the above audits, HDI will notify the physician of the error. This is not the refund request. HDI will send an overpayment notification to Palmetto GBA, who will adjust the claim to reflect the proper payment. Palmetto will send the overpayment refund request letter to the physician. Physicians may then refund the money or request a redetermination of the overpayment using the Redetermination: Recovery Audit Contractor (RAC) form located in the “Forms” page on Palmetto’s website. If the overpayment is due to incorrect billing, a corrected claim should be submitted with the appeal request.

To review the full list of areas under review, please see the HDI website here.


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