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In March 2014, CMS temporarily suspended the Recovery Audit Contractor (RAC) program until it secured new contracts. The contracts for the program expired in June 2014, and in August, CMS said that it would restart the program on a restricted basis under a new contract that allows recovery auditors to review a limited number of claims. With the RAC program timed to go into effect at the start of 2015 contracts, CMS recently announced several changes to the program in response to complaints by providers regarding oversight, burdensome requirements and a lack of transparency.

One of the most significant changes limits the RAC look-back period for patient status reviews to six months after the date of service if the hospital has submitted its claim within three months of the date of service. Previously, recovery auditors had a three-year look-back period, which resulted in acute inpatient hospitals being unable to rebill denials from patient status reviews. This revision now allows providers the opportunity to comply with timely filing rules and re-bill denied Part A claims as Part B claims within one year from the date of service.

Recovery auditors also will be required to maintain a first level of appeal overturn rate of less than 10 percent. Failure to maintain this rate will result in a corrective action plan for the recovery auditor. It is important to note that this rate limit excludes those claims that were denied due to insufficient documentation and claims that were corrected during the appeals process. Additionally, recovery auditors will no longer receive their contingency fee upon denial and recoupment of a claim. Now recovery auditors must wait for payment until the second level of appeal has been exhausted. CMS has stated that this delay in payment is to “assure providers that the decision made by the recovery auditor was correct based on Medicare statutes, coverage determinations, regulations, and manuals.”

Other changes include the establishment of additional documentation request (ADR) limits based on a provider’s compliance with Medicare rules. This change was in response to feedback by providers that current ADR limits fail to take into account provider size or compliance with Medicare rules. These ADR limits also will require that auditors “incrementally apply the limits to new providers under review,” in response to concerns that new providers were receiving requests for the maximum number of medical records allowed.

CMS said that it “is confident that these changes will result in a more effective and efficient program” and has expressed interest in developing a provider satisfaction survey to allow providers a means to rate recovery auditors’ performance. These program changes will be effective with each new RAC contract award, beginning with the DME, home health and hospice recovery audit contract awarded on December 30, 2014.

New Limitations on RAC Program