Health Law Alert: CMS Orders Stop to RAC Record Requests

February 21, 2014

On February 18, 2014, in an announcement likely spawned from OMHA’s Appellant Forum one week prior, CMS pressed “pause” on the Recovery Audit Program, noting that a transition period will allow the RACs to complete all outstanding reviews by the time their current contracts expire. CMS further explained that, during this period, the agency will be able to “refine and improve the Medicare Recovery Audit Program” by reviewing the ADR limits, timeframes for review, and communications between the providers and the RACs. CMS outlined three important dates that providers should anticipate:

  • February 21, 2014: the last day the RACs may send a post-payment Additional Documentation Request ("ADR").
  • February 28, 2014: the last day the MACs may send prepayment ADRs for the Recovery Auditor Prepayment Review Demonstration.
  • June 1, 2014: the last day the RACs may send improper payment files to MACs for adjustment.

Although a slow-down under the RACs’ current contracts has been in the works for some time, CMS’ announcement indicates that the agency may be considering providers’ concerns more closely. In fact, “in response to industry feedback,” CMS also announced a number of changes to the RAC Program that it believes will result in a more effective and efficient program. The changes, listed below, will be effective with the next Recovery Audit Program contract awards:

  1. RACs must wait 30 days to allow for a discussion before sending the claim to the MAC for adjustment (thus, providers will not be forced to choose between initiating a discussion and an appeal).
  2. RACs must confirm receipt of a discussion request within 3 days.
  3. RACs must wait until the 2nd level of appeal is exhausted before they receive their contingency fee.
  4. New ADR limits will be diversified across different claim types (inpatient, outpatient, etc.)
  5. RACs must adjust the ADR limits in accordance with a provider's denial rate (providers with low denial rates will have lower ADR limits, and vice versa).

To view the changes, click here.

Please contact the Phelps Dunbar Health Law Group if you have any questions regarding CMS’ recent announcements.