The Centers for Medicare & Medicaid Services (CMS) has released its final report (PDF, 706K) on the Recovery Audit Contractor (RAC) three-year demonstration, which ended on March 28, 2008. CMS reported that at the conclusion of the demonstration, the RACs succeeded in correcting more than $1.03 billion in Medicare improper payments. Approximately 96% ($992.7 million) of the improper payments were overpayments collected from providers, while the remaining 4% ($37.8 million) were underpayments repaid to providers. The Medicare Secondary Payer (MSP) RACs collected fewer overpayments ($12.7 million) than the Claim RACs ($980.0 million).
Cardiac defibrillator implants were listed among the top services in which overpayment was collected for being performed in the wrong setting, and thereby considered medically unnecessary. The report states “in instances where there is no Medicare policy, the RACs reviewed claims based on accepted standards of medical practice at the time of claim submission. The RACs did not develop or apply their own coverage, coding, or billing policies.”
The Heart Rhythm Society disagreed with the RACs determinations for ICD procedures and expressed its concern during a face-to-face meeting with CMS officials in April. Since the Medicare National Coverage Determination (NCD) for Implantable Automatic Defibrillators does not specify criteria for appropriate clinical setting for patients undergoing ICD procedures, the Society questioned whether the RAC reviewers were qualified to make medical necessity decisions based on inconsistent judgments made across similar cases.
Because it is important that the RAC reviewers and Heart Rhythm Society members adhere to the same principles for implantation of permanent pacemakers, implantable cardioverter defibrillators and ablation procedures, the Society has developed a list of conditions (PDF, 70K) that warrant inpatient admission status to assist members with preparation for the arrival of the permanent RAC program. The Society also intends to work with local Medicare carriers to develop policy language, as well as work with the American Hospital Association and state hospital associations to develop standards for hospital procedures.
CMS made a number of changes to improve the RAC permanent program, most notably the requirement that all new issues identified by a RAC for overpayments be validated by CMS or an independent RAC Validation Contractor. Any upcoming new issues also have to be shared with provider organizations. The Evaluation Report also addresses a number of questions about the feasibility and merits of applying recovery audit principles and methods to the Medicare program.
CMS plans to implement the RAC permanent program gradually this summer, beginning with a limited number of States, and expand it nationwide by January 10, 2010. Monthly updates on the RAC Evaluation Report will be released through the summer of 2008 to reflect updated appeals and other statistics.
More detailed data on the RACs is available on CMS’s web site in the FY 2006 RAC Status Document and the FY 2007 RAC Status Document.
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