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A real advantage with current claims is that the claims can be corrected and refiled if errors or omissions are identified. Retrospective audits look back in time and consider only paid claims. Often the claims are so old that there is no opportunity to correct and refile them. If there is an overpayment found, then a repayment is appropriate.

On the occasions where underpayments may be identified, generally these underpayments are lost. As we discuss different approaches to various governmental auditing programs, we will refer to this general framework. Certainly, there are formal, postpayment retrospective audits to determine if overpayments or underpayments have occurred. At the claim processing and adjudication level there are also prepayment audits.

These types of audits are typically generated through some sort of data mining being conducted by the Medicare administrative contractor.

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A special kind of audit used by Medicare is termed educational audits. These audits tend to be conducted on site and may include review of documentation. Often these audits are triggered by some sort of data mining that shows inconsistencies in the claims. Typically, the auditors will conduct the audit and then educate the healthcare provider on the correct way to code, bill, document, and then be reimbursed. The most interesting aspect of these audits is that the fiscal intermediary FI or carrier does not go back to correct previous claims; the intent of the auditing process is to change the behavior of the healthcare provider.

The educational audits by the Medicare administrative contractors represent a very interesting although unwritten approach. The basic idea is to identify when and where a healthcare provider is making mistakes, audit to verify, and then correct the behavior on the part of the healthcare provider. As noted above, there is no backtracking to determine any overpayments or underpayments. Sometimes this same philosophical approach is used by the Medicare program itself.

If there are payment mistakes, specifically underpayments, on the part of Medicare, then after the problem is identified and corrected Medicare does not go back and make additional payments for any underpayments. However, there was no process of going back to pay all the hospitals that had been underpaid for performing this service in and With the Medicare program implementing the RACs, will the RACs look for and possibly identify improper payments resulting from incorrect decisions or technical errors made by the Medicare program itself? Time and experience with the RACs will answer this question; however, it is not likely that the possible issue of mistakes on the part of the Medicare program itself will be a high priority for the RAC activities.

Some issues may appear repeatedly over the years in different forms. Thus, the RACs do not have to start anew: they already have a fairly significant listing of potential issues. When an issue is identified by the OIG, a limited number of healthcare providers are audited to determine if there really is a problem. This may involve off-site audits or on-site audits, as the case may be.

Recovery Audit Contractor contract

Due to staffing limitations, the OIG can only perform a limited number of audits. After the audits and studies are completed, a report is issued detailing the findings and recommendations for correction or improvement. For example, a simple issue is the correlation of surgical coding between hospitals and physicians. Physicians provide surgical services in hospitals, and then both the physician and the hospital report the services through surgical CPT coding.

Both of these modifiers are payment modifiers; that is, they provide for separate payment when used. As you can tell from the description, the use of this modifier is subjective. This subjectivity lends itself extremely well to the RACs. In the late s the DOJ launched an investigation of hospital technical component use of the modifier primarily in western Pennsylvania. The modifier is used extensively with emergency department ED visits, and then also with provider-based clinic visits.

As with some other APC issues, the mindset that is associated with physician coding and billing may carry over to the hospital side. Because hospital technical component coding is based on resources utilized while professional component coding is based on what physicians actually do, there can be some distinct differences. Consider Case Study 3.


While this seems a simple case study, there are definitely some subtleties. Based on the description in the case study, the ED physician did not perform a general examination of the patient. The physician only addressed the laceration. He cut his arm while washing his new car. The ED nurse performs a quick triage and then a more extensive assessment.

A Survival Guide for Healthcare Providers, 1st Edition

There was no fall, dizziness, or other conditions, just the laceration on the arm. The nurse cleanses the wound, obtains the suture kit, and calls the ED physician in to perform the laceration repair. The physician examines the wound and performs the suturing. The nurse applies dressings and instructs the patient on taking care of the wound, and requests that the patient either come back to the ED in four or five days or go to his own primary care physician.

However, the ED nurse did perform an assessment that went beyond the laceration repair. While this assessment may be performed by the physician, in certain circumstances, nursing staff can also be qualified to perform the MSEs. See Chapter 7 for further discussions. Report and information concerning CERT go all the way back to Thus, there is significant information concerning types of errors encountered and then the overall error rate. This year, for the first time, some data on MACs will be included in this report.

See the discussion below concerning underpayments. This process of excluding reviewed claims is being handled at the data warehouse level for the database of paid claims. While this guidance addresses general healthcare compliance concerns, a major part of these Federal Register entries address various coding, billing, and reimbursement issues. The hundreds of issues raised by the OIG will certainly be studied by the RACs as a source of situations in which overpayments have occurred.

For all personnel involved in CBR compliance, these Federal Register entries must be studied carefully. A significant portion of these issues relate to various coding, billing, and reimbursement issues. In some cases the footnotes take up more space than the main text! How are the RAC audits different from other auditing processes? We will discuss specific RAC audit approaches in Chapter 5 and a whole series of issues in Chapter 4. RAC audits are generally retrospective and deal with paid claims.

Basically, unless the claim has been paid, the given claim will not be in the database of claims that the RACs can consider.

The Medicare Recovery Audit Contractor Program

Claims can be current in some sense. This means that a RAC could review a claim, assert that an overpayment has occurred, recoup the overpayment, and the healthcare provider would still have the opportunity to refile a corrected claim. The biggest difference with the RAC audits is the breadth and scope of the audits.

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Virtually every healthcare provider in the country will be subjected to some form of review or audits in the coming years. Also for the RACs, the breadth of topics that will be considered is limited only by the imaginations and creativity of the RACs themselves. While there is an approval process for issues that can be examined, CMS is most likely to approve almost anything that can possibly recoup any overpayments. The RAC audits are really a significant escalation in audits that have been, and will continue to be, made by various governmental entities.

Thus, there is a significant foundation of known or, at least, suspected issues from which the RACs can launch their efforts. What Happened to the Underpayments?