CMS Recovery Auditor Contractors to Scrutinize Medicare Billing Practices

Health care providers who bill Medicare should prepare for some extra scrutiny into their medical claims. The Centers for Medicare & Medicaid Services (CMS) announced earlier this month that it has assigned permanent Recovery Audit Contractors (RAC) to help identify improper Medicare payments.

In early October, CMS appointed four companies to serve as RACs. Melanie Combs-Dyer, CMS’ senior technical advisor for the Division of Recovery Audit Operations, told insideARM that each of the four contractors will cover a quadrant of the country.

Diversified Collections Services, Inc of Livermore, Calif., will cover Region A; CGI Technologies and Solutions Inc. of Fairfax, Va., will cover Region B; Connolly Consulting Associates Inc. in Wilton, Conn will oversee Region C; and HealthDataInsights of Las Vegas will cover Region D.

So far, 19 states have been added to the RAC program. Other states will be added in six month increments until all states are included in the program by January 1, 2010.

Combs-Dyer said health care providers who file Medicare claims in the states already assigned an RAC could begin receiving requests for medical records in December.  Auditors will focus on providers who have received improper payments.

“If you’ve never submitted an improper claim, it’s less likely you will be audited,” Combs-Dyer said. She said no claims will be reviewed without the CMS approval and no claims paid prior to October 1, 2007 will be subject to review. Additionally, RACs may only review fee-for-service claims they believe received improper payments for reasons such as incorrect coding, non-covered services and duplicate billings. A RAC may not reopen a claim billed by a Medicare HMO or drug program.

Combs-Dyer said CMS, the state hospitals associations, and RAC for the region will host meetings in each state to allow providers to ask questions and learn about the process before the RAC begins its reviews.

The RAC program’s main purpose to identify improper payments, Combs-Dyers said. However, the reviews may uncover potential fraud, (“South Florida Home to 20% of Nation’s Medicare Fraud,” June 5), which Combs-Dyer said will be referred for investigation. 

Medical equipment suppliers have been the most visible symbols of Medicare fraud for submitting unwarranted claims. However, federal investigators are seeing more fraud cases among hospitals and home health care agencies.

Acting Administrator Kerry Weems told the Health Care Compliance Association and American Health Lawyers earlier this month that CMS will not rely exclusively on paper and electronic trails to identify fraud.

“We are interviewing beneficiaries to determine whether services were ever rendered, and the ordering physician to see if the services were medically necessary,” Weems said. “Some of these visits will be CMS employees or contractors; some of these visits will be conducted by law enforcement personnel who will have badges and handcuffs, not pocket protectors.”

To better prepare for an audit or avoid subsequent audits, CMS advises health care providers who have had improper payments on Medicare claims to review the RACs’ websites to identify a pattern of denied claims.  Health care providers also should:

• Conduct an internal assessment of their claims with an eye towards claims filed for procedures that were persistently denied.
• Implement procedures to promptly respond to RAC requests for medical records.
• Keep track of denied claims and correct previous errors.
• Determine what corrective actions need to be taken to ensure compliance with Medicare’ requirements to avoid submitting incorrect claims.