CMS Proposes Extension of RAC Audit to Medicare Advantage Plans

Guest post by Rajeev Rajagopal, president, Outsource Strategies.

Rajeev Rajagopal
Rajeev Rajagopal

The proposal of the Centers for Medicare & Medicaid Services (CMS) to expand its Recovery Audit Program to Medicare Part C or Medicare Advantage (MA) plans is a new step in its efforts to fight fraud, waste and abuse in the Medicare program. The move is aimed at identifying overpayments and underpayments made on claims for services provided to Medicare beneficiaries. For physicians’ practices, the expanded recovery audit program would mean that they will have to take proactive steps to reduce their risks of falling prey to recovery audits by pay ensuring error-free submission of the claims of MA patients.  Outsourcing medical billing and coding is a great option to accomplish this task.

Medicare Advantage (MA) Plans and Allegations of Billing Fraud

MA plans or Medicare Part C are offered by private insurance companies approved by Medicare, which receive payment from Medicare for the coverage provided. There are different types of MA plans which provide all of a Medicare patient’s Part A (Hospital Insurance) and Part B (Medical Insurance) coverage. Part C plans are different from standard Medicare in that they are paid a set fee every month for each patient based on a complex formula called a risk score. CMS pays higher rates for sicker MA beneficiaries than for those in good health. CMS scrutinizes the diagnosis information reported by MA organizations and calculates risk scores for each enrollee using the Hierarchical Condition Category risk adjustment model. The risk score is calculated based on the enrollee’s demographic characteristics and health conditions. This practice aims to improve the accuracy of Medicare’s payments to MA organizations and reduces the incentives for plans to select only the healthiest beneficiaries.

Identifying Improper Medicare Payments with Recovery Audits

However, in recent years, there have been various reports of overbilling MA plans, costing taxpayers billions of dollars more than warranted. In Jan. 1, 2010, the government set up the Recovery Audit Program to fight fraud, waste and abuse in the Medicare program. It detects overpayments and underpayments for Medicare claims so that CMS can implement actions to prevent improper payments in all 50 states. Under the program, Recovery Audit Contractors (RACs) — private companies hired by CMS — have the authority to review medical records at short notice. RACs notify health care providers of the outcomes of the reviews via demand letters. An RAC demand letter would contain details of the problem with a claim, such as the coverage, coding or payment policy that was violated, a description of the overpayment made, recommended corrective actions, and explanations on the provider’s right to submit a rebuttal statement prior to recoupment of any overpayment and appeal and more.

Current Changes to the RAC Program – Focus on Accurate Clinical Documentation

Up to now, the evaluation by the Recovery Audit Contractors (RACs) was confined to Medicare Part A (hospital) and Medicare Part B (physician and DME) claims. Improper payments under Medicare Part C are recovered via a Medicare Advantage Risk Adjustment Data Validation or RADV audit. However, RADV determinations have progressed at a relatively slow pace since MA Plans were launched, leading CMS to now consider including MA plans as well in the RAC program. Under the current proposal:

Hospitals and individual and group practices that are members (or are considering membership in) the Medicare Advantage program should be prepared for more audits, more findings, and more demands for repayment. It will be much easier for them to face these challenges and to plan for RAC/RADV reviews by getting professional support from an experienced medical coding service provider.

CMS is also proposing to increase the proportion of MA organizations contracts that are subject to an RADV audit. This would make it all the more crucial for hospitals and physicians practices to have certified professional coders review their coding and documentation for accuracy. Coders in an established medical coding company would provide support for everything from expert pre- and post-audit assistance, data import, record retrieval and medical record review, and MRA/HCC coding with validation for RADV, to ICD-10 coding adherence and assistance for submission of accurate and complete data within CMS deadlines.

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