Prepping Your RAC Appeal

October 26, 2010

The Recovery Audit Contractor (RAC) program is picking up steam, and practices should be prepared for an appeals process. Healthcare attorney Andrew Wachler walks through what you need to know about the appeals process.

If your practice hasn't been visited by a Recovery Audit Contractor (RAC) yet, that could change. The program is picking up steam, and practices should be prepared for an appeals process, said healthcare attorney Andrew Wachler.

"We really have never seen anything like it before, in terms of the efforts to take [providers'] money away," Wachler said of the RACs, speaking this week at the MGMA 2010 annual conference. "It's a bit of an overkill."

Although there are other audit contractors scrutinizing practices, RACs are the ones that have gotten significant visibility - and caused significant anxiety - lately.

"RACs came out like gangbusters," said Wachler, owner and principal of Wachler and Associates PC in Royal Oaks, Mich. The auditors are paid on a contingency basis, and make money on the amount of incorrect payments (usually overpayments) they identify.

RACs started in 2005 as a demonstration project in the three states with the highest Medicare expenditures: New York, California, and Florida. The program was expanded in 2007 to include Massachusetts, South Carolina, and Arizona.

The demonstration project netted a savings of nearly $694 million returned to Medicare trust funds, Wachler said. And a 2006 law established it as a permanent program.

Under the permanent program, RACs do have a few limitations, including that they can only look back three years for improper payments, and they must use post-payment reviews.

The healthcare reform bill expanded the program to Medicaid and Medicare Parts C and D. Further, all states must contract with at least one RAC by Dec. 31, 2010.

So what do you do if facing a RAC audit? Wachler explained the steps of the appeals process:

Rebuttal and discussion period. This technically happens before the official appeals process, and is a chance for providers to have an open dialogue with the contractor to try to stop the recovery of the alleged overpayment. It doesn't extend the deadlines. Providers must file the rebuttal within 15 days of receiving the results of the post-payment review. Wachler said that in recent months, providers have been making "substantial progress in the earlier stages of the review."
Redetermination. This is the first step in the appeals process, and a provider has 120 days to file a request for redetermination. To stop a withhold of payment, however, a provider should file within 30 days, Wachler said.
Reconsideration. After the redetermination decision, a provider can submit for a reconsideration within 60 days to avoid withhold of payment. At this stage a provider can submit additional evidence for review, and Wachler said at this point a provider should consult an attorney to have the case analyzed.
Administrative law judge hearing. A request for an ALJ hearing must be filed within 60 days of the reconsideration decision, and the hearing can be conducted by phone, video conference, or in person. Wachler suggested providers make sure they are able to review the file the judge has, to get a better idea of the case against him and any defects in the audit process.
Medicare Appeals Council. A provider who is dissatisfied with the ALJ decision has 60 days to file an appeal to this council. Finally, the case may go to Federal District Court, but that is rare.

Wachler recommended that practices get organized early, setting up an audit committee to handle medical record requests and track deadlines. Practices should also designate a person in the organization who will receive all requests and notices from contractors to ensure they can take advantage of the time to respond. 

For more MGMA 2010 conference coverage, be sure to visit our MGMA Conference Insider page.

Sara Michael is senior editor at Physicians Practice. She can be reached atsara.michael@ubm.com.