The Centers for Medicare & Medicaid Services (CMS) have been operating a demonstration Recovery Audit Contractor (RAC) program in a number of states. Legislation enacted in 2006 makes the RAC Program permanent and directed expansion into all fifty states. West Virginia is included in a jurisdiction where the implementation of the RAC Program is scheduled to start in early 2009 (or later) according to information on the CMS website shortly before the dissemination of this alert.
A RAC’s function is to review records and other information to identify improper Medicare overpayments and underpayments. RACs receive compensation based on a percentage of overpayment recovery. The reports to date are that substantial overpayment amounts have been claimed by RACs ($357.2 million in Florida, California and New York, three of the demonstration states, in FY 2007 according to a February, 2008, CMS press release) and limited underpayment amounts (only $14.3 million of the improper payments identified during FY 2007 for these states were underpayments refunded to health care providers according to this press release). On the other hand, feedback from hospital associations in California and New York is that there are problems in the manner audits are conducted by RACs and there have been numerous successful appeals of audit claims. Other sources have also indicated providers are being consistently successful in appeals.
Given the anticipated roll out in West Virginia, your facility should have a plan in place, in advance, for dealing with RAC requests. First, proper challenges and appeals may be warranted for certain claims. Second, recurrent, unchallenged claims for overpayments by a RAC may be used as a basis for alleging fraudulent activity. Thus, you should plan now to implement a system, that includes cross-departmental sharing of information, to move quickly on requests, appeals and recovery demands. Your system should be in place prior to the start date of a RAC program in West Virginia.
This alert is a periodic publication of Steptoe & Johnson PLLC and should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult your own lawyer concerning your own situation and any specific legal questions that you may have. For further information about these contents, please contact Steptoe & Johnson PLLC. Walter L. Williams of Steptoe & Johnson PLLC is the lawyer responsible for the content of this alert.
