The goal of the RAC program is to identify improper overpayments or underpayments of Medicare claims (although findings of underpayments appear to be rare). Overpayments can occur when a health care provider submits a claim that does not meet Medicare's coding or medical necessity policies. Underpayments can occur when a health care provider submits a claim for a simple procedure but the medical record reveals that a more complicated procedure was actually performed. For the fiscal year through the third quarter of 2011, the RACs have recouped $575.2 million from providers. This number is expected to rise due to increased audit activity.
The RAC assigned to Alabama is Connolly Consulting Associates, Inc. of Wilton, Connecticut ("Connolly"). Information on Connolly can be obtained through its website, http://www.connolly.com/healthcare/Pages/CMSRACProgram.aspx. While hospitals, durable medical equipment and other suppliers were the initial target of Connolly, in the past few months physician practices in Alabama have started to receive overpayment demand letters based on data analysis (called an "automated review"). A typical demand letter provides:
This overpayment was identified through data analysis. Data analysis showed an aberrant billing pattern inconsistent with (insert LCD or policy in violation). (The policy in violation) states ______________________________. Data analysis showed that the claims paid by Medicare __________________. (The above lines are the rationale for the improper payment and the detailed explanation.) The results of our data analysis justified reopening your claim under §1869(b)(1)(G) of the Social Security Act and 42 CFR 405.980(a)(1).
Connolly also has the authority to request medical records from physician practices (called a "complex review"), and with history as a guide, medical record requests should quickly follow the "internal" data analysis currently underway.
In order to prepare for a RAC audit, a physician practice must keep in mind the following:
1. Register a Point of Contact with Connolly. A physician practice should identify a point of contact with Connolly, and update the information quickly if a change occurs. The point of contact is the person within the practice that will receive communication from Connolly, including requests for medical records and overpayment demand letters. If a practice does not identify a point of contact, any correspondence will be sent to the person or persons identified by the practice on its most recent Medicare 855 filing. It is critical that any information sent by Connolly be identified and opened quickly, since important time-frames begin to run upon receipt of the correspondence. Failure to meet a response or appeal deadline because a letter was misrouted or sent "to the wrong person" is not an acceptable excuse. Information on the point of contact process, including registration procedures, can be obtained at http://www.connolly.com/healthcare/pages/ProviderContactInformation.aspx.
2. Respond to Medical Record Requests in a Timely Manner. Physician practices have 45 days to respond to a request for medical records. While in certain circumstances an extension can be obtained, if the medical records are not provided in a timely manner Connolly may deem the claims at issue to be an overpayment by default.
3. Understand the Initial Timeframes Associated with an Overpayment. Once an overpayment demand letter is received (which is defined as the date of the letter plus 5 calendar days), there are several timeframes to consider: a rebuttal must be submitted within 15 days of receipt of the demand letter; interest on the overpayment will begin on the 31st day after receipt of the demand letter (currently, interest is 11.50%); recoupment of the overpayment will occur on the 40th day after receipt of the demand letter, unless a request for redetermination (the first level of appeal) is filed within 30 days after receipt of the demand letter. Providers can avoid paying interest on a denied claim by either paying the amount in full within 30 calendar days of receipt of the demand letter, or win on appeal.
4. Understand the Appeal Levels. Providers are strongly encouraged to appeal any denied claim which can be supported by the medical record. There are five separate levels of appeal:
Level 1 – Redetermination. Providers may file a Level 1 appeal within 120 days after receipt of a demand letter. All Level 1 appeals for Alabama physician practices are reviewed by Cahaba GBA, the Alabama Part B Medicare Carrier. Cahaba GBA has 60 days from receipt of the appeal request to issue a decision.
Level 2 – Reconsideration. Providers may file a Level 2 appeal within 180 days after the receipt of an unfavorable Redetermination decision. Reconsideration is heard by a Qualified Independent Contractor ("QIC"). It is critical that the provider present all evidence in support of denied claims at this appeal level, or risk having future evidence excluded. The QIC is required to issue its decision within 60 days of receiving the request for Reconsideration.
Level 3 – Administrative Law Judge. Providers may file a Level 3 appeal to an Administrative Law Judge ("ALJ") within 60 days after the receipt of an unfavorable QIC decision; provided, however, that the amount in dispute meets established monetary thresholds. The ALJ will hold a hearing on the matter (typically by telephone) and is required to issue a decision within 90 days after receipt of the request for a hearing.
Level 4 – Medicare Appeals Council. Providers may file a Level 4 appeal to the Medicare Appeals Council within 60 days after receipt of an unfavorable ALJ decision. CMS may also request Appeals Council review of a claim and the Appeals Council on its own can review specific matters.
Level 5 – Judicial Review in Federal Court. If a provider is unhappy with the Appeals Council decision, it has 60 days from receipt of the decision to file a request for judicial review with the appropriate federal district court.
As RAC audits increase, it is important that physician practices understand their rights to challenge any overpayment demand. In general, providers have had a high degree of success through the appeal process, but unfortunately many providers simply pay the overpayment demand and do not challenge the RAC decision.
Howard E. Bogard is Chair of the Health Care Practice Group at Burr & Forman LLP and exclusively represents health care providers in regulatory and corporate matters.
