Reports of Some RACs Rescinding Reviews

The RACs officially rescinded some reviews in the past few weeks, even after having completed complex reviews including the issuance of denial letters to the providers for the claims reviewed.

This has occurred in at least two of the four RAC Regions. Some providers now fear this may be the beginning of a trend whereby the RACs request records, citing "good cause" for a CMS approved issue; subsequently find no evidence of that approved issue; but while reviewing the records, find evidence of a different, not yet approved issue.

The concern is that the RAC is "sandbagging" the record in order to wait for a more "lucrative" cause for denial. While this may seem improper, the guidelines outlined in the RAC Statement of Work (SOW) appear to actually require the RAC to withhold a review results letter if a subsequent review is performed on the same claim.

Denials Without Demands

Anyone familiar with the RAC program knows that once a RAC sends a request to a provider for medical records, the provider has just 45 days to deliver said records to the RAC. (Failure to deliver the records is cause for a complete denial of the claim and subsequent recoupment of the entire reimbursement.) If the provider delivers the records, the RAC then has 60 days to complete the review of the claim and submit a letter to the provider listing the review findings, including a detailed description of the Medicare policy or rule that was violated and a statement as to whether the violation resulted in an improper payment. In the case of an overpayment, the RAC next notifies the appropriate Fiscal Intermediary/Medicare Administrative Contractor (FI/MAC) and the process of recoupment begins.

Medicare uses recoupment to recover the majority of provider overpayments. It is a well-defined process, reducing present and/or future Medicare provider payments and then applying those amounts toward the debt. Providers are notified via a demand letter indicating the amount that is owed.

In the cases I refer to above, however, no demand letters were sent to the providers. Instead, they received notices that the RAC was "rescinding" either or both the record requests and the record review. According to those providers, no further explanations were provided by the RAC or the MAC.

Two Questions

When I was first told of this I did wonder two things: first, is the RAC allowed to do this; and second, why would the RAC do this?

Question #1: Is This Allowed?

The first thing to answer is really about whether the RAC can do multiple reviews on the same claim. If the RAC is not allowed to do so, then this would provide a good answer to the second question.

If the RAC is only allowed to file a single denial for a claim, but is able to document more than one reason for denial, then the RAC would be smart to use whichever denial would produce the largest fee for the RAC.

However, there is no limitation in the SOW on how many times the RAC may review any claim. In fact, the SOW even provides guidance for what the RAC should do in the case of multiple reviews for a single claim.

In the SOW under Section F, Activities Following Review, paragraph 3, Communications with Providers about Improper Payment Cases, the RAC is instructed that it may send the provider only one review results per claim. However, later in the same paragraph, there is conflicting instruction. Here is the paragraph with the conflicting statements in bold.

"The RAC may send the provider only one review results per claim.  For example, a RAC may NOT send the provider a letter on January 10 containing the results of a medical necessity review and send a separate letter on January 20 containing the results of the correct coding review for the same claim.  Instead, the RAC must wait until January 20 to inform the provider of the results of both reviews in the same letter.  It is acceptable to send one notification letter that contains a list of all the claims denied for the same reason (i.e. all claims denied because the wrong number of units were billed for a particular drug).  In situations in which the RAC identifies two different reasons for a denial, a letter should be sent for each reason identified. For example, if the RAC identified a problem with the coding of respiratory failure and denied several claim(s) because the wrong procedure code and wrong diagnosis codes were billed, the RAC should send two separate letters.  The first letter should list all claims in which an improper payment was identified that contained the wrong procedure code and the second letter should identify those denied because the wrong diagnosis code was billed." RAC SOW pp 21, f.

The language is difficult and we have asked for some clarification from CMS.

Meanwhile, despite the contradictory statements there are two things we can know for sure.

1.   The RAC is certainly allowed to perform multiple reviews per claim.

2.   If the RAC reviews a claim more than once, the results of reviews for that claim should be sent out at the same time even if it means delaying the delivery of the earlier review.

Based on these two facts, there would seem to be no reason for a RAC to "sandbag" a review, waiting for a later, more profitable denial. If the RAC has two reasons for denial, it is simply instructed to deliver the results at the same time. Therefore, there would be no need to "rescind" a review results letter (according to my interpretation of the above instructions).

So, why rescind?

Question #2: Why would the RAC rescind a review?

My first thought about why a RAC would rescind a review concerned something I remembered from earlier readings of the SOW - the RAC would not be allowed to review a claim already under review.

In an effort to "minimize the impact on the provider community," CMS included in the RAC program a system to prevent "overlap" - the RAC Data Warehouse, which holds all the data made available to the RACs by CMS.  The warehouse includes a list of all claims being reviewed by any other government entity (a Medicare contractor, a MAC or law enforcement).

Continued on the next page.