The goal of the Centers for Medicare & Medicaid Services (CMS) Recovery Audit Program is to identify and correct improper Medicare payments by detecting overpayments made on claims of health care services provided to Medicare beneficiaries, as well as to identify underpayments to providers so that the CMS can implement actions that will prevent future improper payments. Post-payment claims are reviewed by recovery audit contractors (RACs), which were first employed in 2011-2013 after a successful CMS pilot program and have been used since. These third-party medical record audit companies are paid a commission based on the recovered amount of previously paid services.
The CMS awards contracts to different RACs in four regions throughout the country for Medicare Parts A and B payment reviews. One RAC is selected to review payments made to home health care, hospice, and durable medical equipment (DME) providers.
Private insurers can also perform health care RAC audits.
Types of Payments Flagged
Payments are deemed improper based on the following:
- Payments are made for medically unnecessary services or do not meet the Medicare medical necessity criteria.
- Payments are made for services coded improperly (for example, the provider submits a claim for a certain procedure, but the medical record indicates that a different procedure was performed).
- Providers fail to submit documentation to support the services provided when requested or fail to submit enough documentation to support the claim.
- The provider is paid twice because duplicate claims were submitted.
- Other errors are made (such as an insurer paying the claim according to an outdated fee schedule).
- Medicare pays a claim that a different health insurance company should have paid.
2022 RAC Audits
Expectations are that health care RAC audits performed on behalf of the CMS for 2022 will be more comprehensive than in previous years. In addition to reviewing financial records for compliance, organizations must demonstrate that they provide quality patient care. Protecting patients is one of the primary reasons why the CMS and insurance payers ensure that health care providers are not overbilling or providing unnecessary services. Overbilling or providing unnecessary services by providers can raise the cost of health care for everyone and jeopardize the quality of care provided to patients.
Here are several pointers home health care and hospice providers should implement to help with RAC and other audits:
- Ensure billing and coding procedures are current and accurate.
- Use secure, cloud-based software to ensure that patient data is securely transmitted.
- Train employees on how to effectively use remote audit tools – this is especially critical if staff is working remotely.
- Keep detailed records of all communications with insurance companies and patients.
- Be vigilant about the collection process and promptly follow up on any outstanding payments.
The OIG and Telehealth Services
Due to the pandemic, Medicare amended regulations on an interim basis to allow health care providers, including home health care agencies, to offer telehealth services in conjunction with in-person visits. According to the Office of Inspector General (OIG), telehealth increased dramatically during the first year of the pandemic. More than 28 million Medicare beneficiaries – about 2 in 5 – used telehealth services in 2020. In total, beneficiaries used 88 times more telehealth services during the pandemic’s first year than in 2019.
The OIG identified providers whose billing for telehealth services during the pandemic’s first year poses a significant risk to Medicare. Providers had billing issues on at least one of the seven OIG-developed measures, which could indicate fraud, waste, or abuse of telehealth services – for example, billing for telehealth services that are not medically necessary or were never provided.
As a result, the OIG has recommended that the CMS strengthen its monitoring and oversight of telehealth services and provide additional education to providers on appropriate billing for such services. We recommend you go over this with home health care providers that have provided telehealth services.
RAC Insurance Coverage
Ensure home health care and hospice providers have Regulatory Audit Insurance Coverage (RAC) in place. Manchester Specialty Programs provides RAC coverage as part of our Directors & Officers (D&O) Liability insurance to address alleged violations of RAC and to offer the ability to cover defense costs, audit fines, and penalties. Our insurance carrier can also provide compliance assistance, audit preparation, and response services. In addition, Administrative Defense Coverage is an alternative coverage available as part of our Professional Liability program.
About Manchester Specialty
We specialize in providing agents and brokers with integrated business insurance solutions to meet the needs of Home Care, Allied Health, Medical Staffing, and Human/Social Services organizations. For more information about how our products and services can help protect your insureds and how we recognize accredited firms, please contact us at 855.972.9399.