1. National Healthcare Compliance Audioconference:
Medicare RAC Audit Update
Don May
American Hospital Association
May 13, 2008

2. $$?? CMS View FY 2007 RAC Performance: BACK TO TRUST FUNDS $247.4 m
Overpayments Collected:
$357.2m
Less Underpayments Repaid: -
($14.3m)
Less $ Overturned on Appeal:
($17.8m)
Less Costs to Run Demo:
($77.7m)
BACK TO TRUST FUNDS
$247.4 m
$$??

3. Hospitals strive for accuracy in service, billing, and coding
Hospitals support program integrity efforts
Lot’s of overlap by auditors
RACs’ bad behavior unacceptable

4. Medicare coding problems and providing unnecessary care (wrong setting) were the key target areas of RACs 9%
No/Insufficient
Documentation
17%
Other
42%
Incorrect Coding
32%
Medically
Unnecessary ??
SOURCE: Self-reported by RACs

5. Percent of Hospital FY 2007 Revenue Impacted by RACs
80%
70.4%
70%
New York
60.4%
Florida
60%
California
50%
43.4%
40%
31.8%
30%
23.2%
25.0%
18.2%
20%
7.0%
10%
5.0%
5.2%
3.9%
1.4%
1.4%
2.0%
0.5% 0%
No Offsets
0% to 2.5%
2.5% to 5%
5% to 10%
> 10%
SOURCE: CMS 2007 RAC Status Report

6. CMS Has Responded to Some Concerns RAC Program Improvements
No Contingency Fee when Denial is Overturned at Any Level of Appeal
Required to Have a Medical Director
3-year Look-back Period for Review
No claims with a payment date prior to October 1, 2007 will be reviewed, regardless of the actual start date for the RAC in a state.
Use of Staggered Expansion of RACs
Limits on the Number of Medical Records a RAC can Request per Month
Requirement for a Web-based Application by January 1, 2010
No funds recouped during first 2 stages of appeals process, IF denial appealed within 30 days

7. Work with CMS for more RAC program changes
Push Congress for legislative relief
Advocacy – STOP and Fix-it
Capps-Nunes legislation (HR 4105)
Member Education
Collaboration and education with state hospital associations
Member advisories and education sessions
RACTrac: Collect data and examples of egregious behavior

8. The Medicare Recovery Audit Contractor Program Moratorium Act of 2007
HR 4105
Rep. Lois Capps (D-CA) Rep. Devin Nunes (R-CA)
77 co-sponsors
1-year Moratorium
CMS Report
GAO Study

9. STOP and Fix-it
Slow down
Reduce or remove contingency method of payment
Exclude medical necessity from RAC review
Reduce look-back to 12 months
Centralized electronic tracking platform of RAC denials and appeals
Exemption from “timely billing” rules
Improved CMS management and transparency of RAC program
Bigger focus on UNDERpayments

10. Establish internal RAC team
Interdisciplinary Team: Coders, Finance, Clinical, Utilization Review, Case Management
Identify RAC point of contact for internal and external RAC communications
Develop a central tracking mechanism for all RAC correspondence
Incoming and Outgoing
Conduct a self audit to identify potential problems
Participate in RAC trainings