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Medicare Waste, Fraud & Abuse

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The AMA strongly believes that the vast majority of physicians are honest and make a good-faith effort to comply with Medicare program requirements. Unfortunately, many of the federal government’s efforts to address waste, fraud and abuse add unnecessary costs and burdens for honest physicians focused on patient care. The AMA works to ensure that the federal government’s program integrity policies are equitable.

Read AMA letters to learn more about the depth of involvement into the issues of fraud and abuse.

Medicare Recovery Audit Contractors (RAC)

Congress created the RAC program to help the Centers for Medicare & Medicaid Services (CMS) identify improper Medicare payments. Unfortunately, bounty-hunter-like incentives cause physician practices undue hardship, expense and time away from patients. The AMA strives to make sure that CMS implements the RAC program in an equitable manner.

About RACs

RAC auditors are private entities paid a commission by the government to:

  • Identify overpayments or under payments
  • Recoup overpayments or return underpayments

The AMA was one of the few organizations that weighed in on Medicare’s most recent requirements for the RACs.  Medicare outlines these requirements in the Statement of Work (SOW). CMS issued the most recent RAC SOW in late 2015.

Among the AMA secured SOW improvements:

  • RACs are required to maintain an accuracy rate of at least 95%. Failure to maintain this accuracy rate will result in a progressive reduction of the RACs ability to request medical records from physicians.  
  • If claims are overturned on appeal, RACs must pay physicians interest calculated from the date of recoupment.
  • RACs will not receive a contingency fee until after the second level of appeal is exhausted.
  • CMS is keeping the limits on the RACs ability to request medical records from physicians.
  • CMS is establishing medical record limits based on a physician’s compliance with Medicare rules.
  • CMS will place a lower limit on the number of medical records a RAC may request of a physician with a low denial rate. CMS will also allow RACs to request more medical records from physicians with higher denial rates. The medical record limits will be adjusted as a physician’s denial rate decreases. Therefore, a physician who complies with Medicare rules will have fewer RAC document requirements.
  • RACs are required to have a physician contractor medical director and are encouraged to have a panel of specialists available for consultation.
  • RACs must offer physicians the chance to discuss improper payment identification with the contractor medical director.

RAC Provider Coordinator

When CMS announced a new round of RAC auditor contracts in 2014, the AMA used that opportunity to advocate for fixing many of the program’s flaws. This resulted in a number of major changes to the original RAC program guidelines (PDF).

CMS also appointed a new provider-relations coordinator to work with physicians on larger RAC audit-process issues. For example, questions about specific claims should continue to go directly to the RAC or Medicare Administrative Contractor (MAC). However, a physician should contact the RAC provider coordinator if an auditor fails to comply with documentation request limits or does not issue timely review results.

AMA-Advocated RAC Improvements

  • CMS shortened the timeframe a RAC can go back and recover monies from 4 years to 3.
  • RACs must have certified coders.
  • RACs can request up to 10 medical records per single practitioner within a 45-day period, but current advocacy seeks to lower the amount to no more than 3 within a 45-day period.
  • RACs now must have a medical director.
  • RACs must maintain a web presence where physicians can look up the status of audits involving medical record reviews.
  • Specific issues reviewed by each RAC (referred to as vulnerabilities) must be posted on their respective websites.
  • Contingency fees RACs receive are now public and must be paid back if an appeal is lost.
  • An independent external validation process is now mandatory to help ensure audit areas are appropriate.

Read more about the AMA’s advocacy efforts to refine and improve the RAC program or visit the CMS website to see the latest changes.

Overturn an Audit

For those looking to overturn an audit, the AMA created an Medicare Recovery Audit Contractor Program Appeals Fact Sheet (PDF, sign-in required) to help with the process. For concerns or suggestions with RAC or Medicare Administrative Contractor (MAC) review-process, reach out to the RAC Provider Coordinator at [email protected] or the Medicare Administrative Contractor at [email protected].

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