RAC Expansion: How Radiology Practices Can Prepare

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Missy LovellIn 2007, CMS implemented a new program aimed at eliminating fraud and abuse: the use of Medicare recovery audit contractors (RACs). Under the RAC program, independent contractors look for improper Medicare payments in exchange for a percentage of the overpaid or underpaid dollars discovered, resulting in a high level of scrutiny for Medicare reimbursement.

Ed GainesEd Gaines, vice president and chief compliance officer for Medical Management Professionals, Inc. (MMP), says, “RACs, even in their earliest stages, saved a lot of money.” In fiscal 2011 (ending September 30), the Medicare Part B RACs collected more than $900 million, including adjustments for underpayments. As a result, Gaines says, expansion of the program to Medicaid and Medicare Advantage plans was a natural move for Congress to undertake when attempting to justify the cost of the Patient Protection and Affordable Care Act (PPACA). “The RAC program was scored by the Congressional Budget Office as savings billions on Medicare, and those predicted savings offset the significant costs of the PPACA,” he says.

Thus, this year, the RAC program will expand to all states in the Medicaid program, and will eventually be extended to Medicare Advantage plans and Medicare Part D as well. Because Medicaid programs are managed and funded in cooperation with the states that they serve, Gaines notes, “Medicaid RACs are going to be more creatures of the state than anything similar we have seen on the Medicare side.” All states have submitted Medicaid state plan amendments for RACs; of these, 41 have been approved.

How to Prepare

Gaines and his colleague, Missy Lovell, compliance manager for MMP, recommend that radiology practices focus on what the Medicare and Medicaid RAC programs will have in common to understand what to expect. “We have been surprised that we have yet to see more on the Medicaid RAC, since this is the year it is supposed to begin, but practices can begin by looking at the issues the Medicare RACs are posting, and seeing how those equate to their own practice patterns, to identify the high-risk areas the RACs may be centering on,” Lovell says.

Gaines suggests that practices can look to other bodies as well, most notably Medicaid integrity contractors and payment error rate measurement (PERM) contractors. PERM contractors, he explains, are the Medicaid equivalent of Medicare’s comprehensive error rate testing (CERT) contractors; these entities “look not only at the provider, the hospitals, and the radiologists, but also at the contractors, so a lot of the issues the RACs look at have already been mined by the CERT process,” Gaines says. “CERTs have looked at thousands of records and found documentation problems or coding issues, so the RACs make those error rates their next initiative.”

PERM contractors are likely to have a similar symbiotic relationship with the Medicaid RAC program. “One of the major findings, on the part of PERMs, is insufficient documentation—the record does not support the diagnostic services rendered, or there was no documentation,” Gaines says. “Those are about 97% of the problems they have found.”

Lovell also suggests that practices specifically examine their Medicaid populations and the most frequently provided services therein, studying how Medicaid policies relate to those services. “Medicare’s and Medicaid’s reimbursement methodologies can be very different,” she notes. “We have seen a lot of differences in the way the two programs might reimburse a procedure. I would highly suggest looking at your most frequently provided Medicaid services and ensuring they are in alignment with the specific Medicaid policy, not just blankly applying Medicare policy.”

Looking Ahead

When CMS eventually expands the RAC program to Medicare Advantage plans and Medicare Part D, “It would be reasonable to assume these programs will function similarly to RACs for Medicare Part B,” Gaines says, “but Medicare Advantage is a program where the health plan is under contract with Medicare and is at risk for providing health services at a lower price point, so it changes the dynamics.”

CMS also plans to implement semiautomated reviews in the Medicare RAC program, scaling back the degree of automation used in identifying overpayment and underpayment through data mining. Gaines explains, “This is a process by which, if the RAC finds a problem in a practice’s data, it notifies the provider, and the provider has the opportunity to send in documentation