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CMS suspends RAC audits, sets up physician safeguards



March 18, 2014
Area(s) of Interest: Fraud & Abuse Licensing & Regulatory Issues 

Physicians and hospitals will get a short reprieve from Medicare’s recovery audit contractors (RAC) until next fall, according to the Centers for Medicare & Medicaid Services (CMS). The agency says it is temporarily halting audits as it reevaluates its contracts and implements improvements for physicians. The RAC program is responsible for identifying fraud and waste in the Medicare system by detecting improper Medicare payments.


Last month, CMS announced it would pause any new additional document requests (ADR) from RACs until new contracts are settled, in order to reduce provider confusion and create a smooth transition once new RAC contracts are awarded. The document requests primarily affected hospital and facility services.


Although the RAC documentation requests for audits are suspended, recovery auditors will complete the audits for the claims for which they sent ADR requests through February 28, 2014. RAC’s will also continue the automated reviews that do not require additional medical record documentation through June 1.


CMS announced further changes to the program this week that will provide much-needed safeguards for physicians. These include requiring RACs to wait 30 days before asking the Medicare administrative contractor to recoup payments determined to be improper. This delay will allow time for physicians to discuss the results of the audit with the RAC. Previously, the short timeline for appeals meant that physicians had to immediately choose between initiating a discussion and filing an appeal.


RACs will also no longer receive a contingency fee directly following the recoupment of a payment they deemed “improper.” Rather, if a physician chooses to appeal the results of an audit, the RAC will not be paid until the physician has exhausted the second level of appeal. Auditors will also now be required to confirm receipt of a physician's request for discussion within three days. Previously, no such confirmation was required, leading to frustration among physicians, particularly given the short timeline for document production, discussion and appeal.

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