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CMS to make “improvements” to recovery audit program

Thursday, March 12, 2015

by Marla Durben Hirsch

Providers should be seeing a more equitable recovery audit program – once the new recovery audit contracts go into effect.

The Centers for Medicare & Medicaid Services has announced that is has made a number of "improvements" to the recovery audit program, formerly known as the recovery audit contract, or “RAC” program. The recovery auditors are tasked with identifying on a post payment basis improper payments not previously reviewed by other contractors, such as Medicare Administrative Contractors (MACs) and Zone Program Integrity Contractors (ZPICs).

"The CMS is confident that these changes will result in a more effective and efficient program, by enhanced oversight, reduced provider burden, and more program transparency," the Agency states.

Several of the improvements include:

  • Additional document requests (ADRs) will now be based on a provider's compliance with Medicare rules; providers with low denial rates will have lower ADR limits.
  • Complex reviews will now be completed within 30 days; originally the recovery auditors had 60 days.
  • The recovery auditors are now required to have a contractor medical director and encouraged to have a panel of specialists available for consultation; previously audits “should” be conducted by physicians in the same specialty or subspecialty.
  • Providers must have 30 days to allow for a request for a "discussion" with the recovery auditor before the auditor sends the denied claim to the MAC for adjudication. Providers no longer have to choose between initiating a discussion after a claim is denied and filling an appeal.
  • Recovery auditors now have to confirm receipt of a discussion request within three business days.
  • Recovery auditors need to improve their provider portals.
  • Recovery auditors will not receive their contingency fee until after the second level of appeal is exhausted. Previously they were paid immediately upon denial and recoupment of the claim.
  • Recovery auditors will now be more accountable. If they have an accuracy rate lower than 95 percent or if they have high overturn rates (10 percent or more at the first level of appeal) they can be subject to corrective action.
  • CMS has established a Provider Relations Coordinator so that providers have a contact person to turn to at CMS if they run into problems with the recovery auditor.
  • CMS will consider developing a provider satisfaction survey in order to get feedback from providers about the recovery auditors.

It's not surprising that CMS is instituting changes to the recovery audit program. Many providers have complained about it; CMS acknowledges in its list of improvements that they are in response to industry feedback. Government Accountability Office also recently found that CMS needed to improve the efficiency and effectiveness of its post four payment review programs as well as to take steps to prevent inappropriate duplicative review and improve its coordination and oversight of the contractors.

The high number of providers appealing recovery auditor decisions to deny claims has also likely contributed to the growing backlog of appeals in the pipeline. The recovery auditors are the only post-payment review contractors that are paid on a contingency basis; the recovery auditors have been accused of being rather zealous in determinations that providers have been overpaid. HHS has proposed in its 2016 budget, released Feb. 2, 2015 to update its appeals process to reduce the appeals backlog, including adding field offices, expanding settlement opportunities, and using more alternative dispute resolution processes. Requiring the recovery auditors to meet accuracy and overturn rates should also reduce the number of appeals filed.

The bad news is that the changes don’t go into effect until the new recovery audit contracts become effective, and that has been postponed. The first new contract awarded, for durable medical equipment, home health and hospice on Dec. 31 2014, has been delayed due to a post-award bid protest filed with the GAO. There have also been at least three pre-award bid protests filed. CMS had halted recovery audit reviews in 2014 in anticipation of awarding the new contracts, but in August 2014 allowed the current contractors to resume some reviews in light of the delay in the new contract awards.

Full list of the upcoming recovery audit improvements
Recent recovery audit program updates
The GAO report
Proposed HHS budget

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