By Anne Llewellyn, RN-BC, MS, BHSA, CCM, CRRN
Editor-in-Chief of Case in Point Magazine and the Case Management Resource Guide

To help organizations prepare for the possibility of an audit from the Recovery Audit Contractors, Case In Point adds to its webinar series a 90-minute training session, Here Come the RACs: Install Steps Now To Improve Compliance (and Avoid Costly Audits) on March 17, 2010 at 12 p.m. EST.

The RACs are Medicare’s latest attempt to control escalating health care costs. To provide background on the how the RACs came into existence, it is important to know that in 2003, the Medicare Modernization Act established the Medicare Recovery Audit Contractor (RAC) program as a demonstration program to identify improper payments (both overpayments and underpayments).  The auditors were paid on a contingency basis, receiving a percentage of the over- or underpayments they collected from providers.

The contractors used proprietary software programs to identify potential payment errors in such areas as duplicate payments, fiscal intermediaries’ mistakes, medical necessity and coding. The outcome of their work was reported in July 2008, when CMS announced that the auditors succeeded in correcting more than $1.03 billion in Medicare improper payments. Approximately 96 percent ($992.7 million) of the improper payments were overpayments collected from providers, while the remaining 4 percent ($37.8 million) were underpayments repaid to providers.

California, Florida, New York, South Carolina and Massachusetts were the states chosen for the demonstration program. As part of the program, the RACs reviewed the last four years of provider claims for the following types of services:

• Hospitals (both inpatient and hospital)
• Skilled nursing facilities
• Physicians payments
• Ambulance
• Laboratory
• Durable medical equipment

The Tax Relief and Health Care Act of 2006 made the RAC program permanent and authorized CMS to expand the program to all 50 states by 2010. According to the American Hospital Association, the national rollout of the permanent RAC program is currently underway, with all states scheduled to come on board this year.

Organizations that are proactive in understanding the Act and that take time to review their internal processes and begin aggressive education with their staff and practitioners and providers will do well. Take a few minutes right now to review the overview of the program and register your site to participate in webinar on March 17, 2010, at 12:00 p.m. EST.