Everyone has heard the fiscal cliff argument from both sides. We have all heard that “entitlement” programs need to be thinned. We have also heard that Medicare is a huge drain on our country, perhaps the most costly of programs implemented. So what is being done?

The Centers for Medicare and Medicaid Services created the Recovery Audit Program. This is run by the CMS through RACs (Recovery Audit Contractors). The CMS RACs review claims submitted by healthcare providers looking for errors in the medical coding and billing, documentation, and medical necessity to determine if an underpayment was made from Medicare or an over payment was made to the doctor or healthcare facility. These errors occur at of 36% of all claims filed for doctor visits and out patient procedures where the stay is less than one day. This 36% equates to about 3.5 billion dollars for the FY2012. That is a huge amount of money for taxpayers and providers.

The most common type of error according to CERT is unnecessary medical procedures being billed. This accounts for 2.6 billion dollars. The next most costly mistake is insufficient documentation. This accounts for approximately .5 billion dollars for the FY2012. The next most costly error occurs in the medical coding, which results in about .6 billion dollars in over payments to providers and about .12 billion in underpayment to providers.

Some of these errors are due to fraud, but most are due to human error. Clearly there is a need for CMS RACaudits. These errors affect us all.

For a provider, knowing the process of the auditing program is important so that you can avoid errors thus avoiding underpayment or over payment. Some important things you need to know as a healthcare provider or healthcare facility:

• The RACs cannot review claims that are more than three years old.
• You have the right to appeal a finding, be it an overpayment or a denial
• All reviews are post-payment audits
• RACs are bound by National Coverage Determinations (NCDs), Coverage Provisions in Interpretive Manuals, national coverage and coding articles, local coverage determinations (LCDs) and local coverage/coding articles in their jurisdiction.
• Your regional RAC website posts all claim types that are authorized for audit
• If manually audited, the RAC is limited to the number of medical files it can request in a 45 day period.

RAC audits affect taxpayers by recovering lost revenue paid out because of these errors made within the Medicare billing system. This is obviously beneficial to our economy.

The CMS RAC recovery program affects Medicare recipients by shoring up the entitlement program for future recipients and those just entering the system. If Medicare goes broke, many elderly will be without medical coverage. In addition, this protects the patient from undergoing unnecessary medical treatments due to fraudulent providers.

The RAC Recovery Program is a valuable tool that is cost effective for everyone.

To avoid costly errors in your medical and billing coding you can call us at 708.747.4361 to speak with a member of our staff about your needs. You can also email us at info@pdnseek.com