RAC 201 – After the Demand Letter Receipt

Let’s discuss what’s happening after the Demand Letter Receipt

RAC Audit checklist image What's happening after the Demand Letter Receipt

BHM assists clients prepare for RAC Audit.

Vickie Axsom-Brown, Senior Consultant, BHM Healthcare Solutions

The notification letter arrives….What next?

FIRST, review the notification letter to determine if it is an overpayment or underpayment notice.  If it is an underpayment notice, there is no rebuttal (discussion) or redetermination (appeal) process because none is needed.  The amount the claims processing contractor (CPC) reimbursed on the claim(s) in the notification was less than the correct Medicare reimbursement amount; therefore, additional payment is due to the billing entity. While this notification seems very clear, the discussion and/or appeal requests for underpayment notices have been troubling.  Please review the underpayment notice and if the audit finding is accurate, accept the additional funds. Remember RAC activities involve identification of both overpayments and underpayments.

If the notification letter is for Medicare overpayment(s), here are some quick tips.

(1) Carefully review the claim(s) audit list and overpayment rational as soon as information is received. An overpayment notification may be issued if requested medical records are not received by the RAC within 45 days of the initial request after one additional contact requesting the medical records.

(2) Assess each claim to determine if documentation exists that could alter the audit finding (e.g., the submitted claim shows 4 units of services billed/paid; however, RAC audit documentation shows 8 units of services billing/paid).

(3) Post notification review, if supportive documentation does not exist, decide on the recoupment option that best meets needs.  Make sure you understand your CPC’s preference so there is clean accounting for any recoupment payments.  Recoupment is not initiated until DAY 41 post receipt of the Demand Letter (automated reviews) or Review Results Letter (complex reviews).

(4) If supportive documentation exists that could alter the overpayment determination, contact the RAC and initiate a discussion. The initiation of a discussion does not impede the Appeals Process….it may make it unnecessary if the RAC agrees to overturn their determination.

The discussion period is not part of the Appeals Process.  It is a CMS RAC feature outside the Appeals process.  Remember, the RAC is only reimbursed for claims that are not successfully appealed.

The benefits the Discussion Period offer include a direct conversation with a RAC Provider Services representative to: (1) gain clarification/understanding of the audit finding rational; (2) obtain further RAC

RAC Statement of Work (SOW), Task 3-Underpayments, Pages 27-28 for Underpayment processes (www.cms.gov/recovery-audit-program/).

RAC SOW, Task 3-Underpayments, Page 27 for underpayment details.

 RAC SOW, Task 2 Identification of Improper Payments, Page 6 and E. The Claim Review Process, Pages 14-16 for improper payment types.

 RAC SOW, Task 2-Identification of Improper PaymentsD. Obtaining and Storing Medical Records for reviews, 3. Assessing an overpayment for failing to provide requested medical records, Page 13.

 RAC SOW,  E. The Claim Review Process. 7. Automated Review vs. Complex Review, Pages 17-19 for review details.

www.cms.gov/RAC/Downloads/ProviderOptionsChart.pdf, RAC Overpayment Determination

 RAC SOW, Task 7-Administrative and Miscellaneous Issues,  C. Payment Methodology (Page 43) last bullet regarding RAC return of payment for Appeals adjudicated in provider’s favor.