Dealing with RAC Audits and Denials: How Healthcare Providers Can Manage Medicare Recovery Efforts

by Womble Carlyle Sandridge & Rice, LLP
Contact

Executive Summary: Medicare RAC (Recovery Audit Contractor) audits are becoming increasingly aggressive, creating delays in payment for healthcare providers. Certain strategies can help mitigate delays caused by RAC audits and denials.
Medicare Recovery Audit Contractors ("RACs") are charged with identifying, on a retrospective basis, overpayments made by Medicare to healthcare providers. Because a substantial percentage of all Medicare payments are made to hospitals, they are often the targets of RAC audits. Increasingly, overpayment determinations made by RACs involve issues relating to the medical necessity of inpatient services previously provided by hospitals, as ordered by attending physicians.
"Medical necessity" is often a far more complex matter than auditors recognize, and providers must often expend considerable time and effort to ensure that RACs do not inappropriately recover funds from them. Providers who have in good faith provided needed care to patients should consider appealing adverse determinations. This is particularly important in reviewing denials, as RACs may issue denials for inpatient admission status, not the medical necessity (and therefore Medicare coverage) of services. Administrative Law Judges ("ALJs") have concluded that in cases where inpatient admissions may not have been documented, the hospital providers should be reimbursed under Part B for all services, including procedures and observation care. In response to these ALJ decisions, in July 2012, CMS issued a directive to contractors to permit rebilling so that providers could be reimbursed for procedures, services and care under Part B, not merely for ancillary services.
Recently ALJs have remanded cases back to contractors involved at lower levels of the appeals process (i.e., to a Qualified Independent Contractor ("QIC") or to the Medicare Administrative Contractor ("MAC"). In their remand orders, ALJs direct that the QIC or MAC calculate an appropriate Part B payment to hospitals for needed outpatient treatments. Importantly, these remands occur before an ALJ has convened a hearing in the appeal and must be decided before a hearing can be set.
Informally, ALJ staff members have indicated that remands are not decisions that claims are not reimbursable under Medicare Part A. Rather, ALJs are simply trying to make sure that "all issues have been addressed" before the case reaches them. Although we understand that ALJs are remanding cases to ensure providers have the opportunity to review re-calculated Part B payments earlier in the appeals process, there are no "deadlines" for remands to be re-reviewed. Ultimately, therefore, providers experience delays in having cases heard, resolved and payments received.
With the increase in RAC and other government audits, it is clear that the Medicare appeals staff have had to manage a significantly larger volume of cases than anticipated. Increasingly, we have prepared alternative strategies to address the impact of delays by presenting affidavits and other evidence "on the record" to secure fully favorable decisions for providers. In addition, filing appeals within the timeframes to stay recoupment of funds could help address cash-flow for providers, at least until a case has to be presented to an ALJ.
Ultimately, it is clear that the RAC and other government contractors continue to audit hospitals and providers aggressively, with more providers appropriately appealing cases. Recently, and likely as a result of the November 2012 OIG report on the ALJ appeals process, we have noted an increasing number of cases where RAC representatives appear at hearings as "non-party" participants, attempting to testify and defend decisions made. Although some ALJs do not permit these non-party participants to present new testimony, others have allowed RAC experts to "counter" expert testimony by providers. Legally, there are several concerns to be addressed, including the inherent bias a RAC-employed expert has in the outcome of an appeal. Although having independent experts involved in cases could be more costly to providers in the short-term, it may be appropriate for certain cases, particularly with significant reimbursement consequences.
If you have any questions about the issues raised in this alert, please contact Womble Carlyle Healthcare Industry Team attorneys Tracy Field, Tom Stukes and Deonys de Cárdenas.
The Womble Carlyle Healthcare Industry Team includes attorneys, medical professionals and certified professional coders, who are able to fully evaluate the medical issues involved in each case, as well as all legal issues involved. Dr. Charles Whigham, who serves as a physician consultant in Womble Carlyle's Atlanta office, has extensive experience dealing with healthcare audit-related issues, having previously served as a Medicare Carrier Medical Director, and as a Medical Director with a Medicare Quality Improvement Organization. He has also previously worked as a Medical Director with a Medicaid Integrity Contractor.
The Healthcare Industry Team is assisted by Womble Carlyle's FirmLogic. FirmLogic is a medical and scientific service of Womble Carlyle that collects medical records and physical evidence, performs medical research and analysis, retrieves medical and scientific literature, vets medical experts, reviews and codes medical documents, serves as a neutral settlement administrator, and offers a secure litigation support management system.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Womble Carlyle Sandridge & Rice, LLP | Attorney Advertising

Written by:

Womble Carlyle Sandridge & Rice, LLP
Contact
more
less

Womble Carlyle Sandridge & Rice, LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!