Recovery Audit Contractor Program —
Heart Rhythm Society Member Advisory

The Medicare Modernization Act of 2003 authorized use of recovery audit contractors as a demonstration to identify improper payments (underpayments and overpayments) made to physicians, hospitals and suppliers under the Medicare program, and to recoup any overpayments. Under the Tax Relief and Health Care Act of 2006 (TRHCA), the Recovery Audit Contractor (RAC) program was expanded to extend it from a pilot to a nationwide program by 2010.

This advisory notice will:

• Highlight aspects of the RAC program Society members need to be aware of
• Describe the Heart Rhythm Society’s outreach and education strategies, and
• Assist members with planning for its implementation

Background

In 2005, the Centers for Medicare & Medicaid Services (CMS) implemented a three-year demonstration project to evaluate the usefulness of RACs in identifying past payment inconsistencies and whether RACs could be a cost-effective means for ensuring accurate payments in the future. Three firms were contracted for the pilot to perform post-payment medical reviews of fiscal intermediaries (FI) and carriers in the states with the largest Medicare expenditure amounts (Connolly Consulting for New York, Health Data Insights for Florida and PRG-Schultz International for California). The pilot was also extended to include Part A providers in South Carolina, Massachusetts and Arizona.

The RAC demonstration ended in March 2008. During the demonstration, Connolly Consulting has focused mostly on inpatient services in Massachusetts, specifically implantable cardioverter-defibrillators (ICDs) and bi-ventricular ICDs (CRT-D).

Expansion of the RAC Program

By the year 2010 (see Proposed RAC Jurisdictions map, PDF, 24K), CMS plans to have four RACs in place. Each RAC will be responsible for identifying overpayment and underpayments in approximately one-quarter of the country. The new RAC jurisdictions will match existing DME/MAC jurisdictions. CMS has also published a RAC Expansion Schedule map (PDF, 1.9M) that shows the projected implementation date for each state.

CMS revised the RAC Statement of Work to include the following:

• Mandatory Medical Director and Coding Experts (RNs for hospitals)
• Three (3) year retrospective review timeframe
• Claims paid before October 1, 2007 are off limits for review
• Return of contingency fees for claims upheld on all levels of appeal

Table: Demonstration vs. Permanent Program

	Demonstration RACs	Permanent RACs
Look back period (from claim payment date- date of medical record request)	4 Years	3 Years
Maximum look back date	None	10/1/2007
Allowed to review claims in current fiscal year?	No	Yes
Medical Director and Coding Experts	Optimal	Mandatory
Medical record limit	Optimal; set by each RAC	Mandatory; set by CMS
Discussion with RAC Medical Director regarding claim denials if requested	Optimal	Mandatory
Vulnerability reporting	Limited	Mandatory
RAC must payback the contingency fee if the claim overturned at...	First level of Appeals	All level of Appeals
Web-based application that alows providers to customize address & contact; see status of case	None	Mandatory by Jan 1, 2010
External Validation Process	None	Mandatory; uniform

The Heart Rhythm Society's Key Concerns with RAC Program

• RACs are paid on a contingency basis (i.e., they retain a portion of the monies recovered) for all accurately identified overpayments. The Society has serious concerns that the funding mechanism for the RAC program is incentive to aggressively pursue overpayments, which may distort contractor judgment.
  
• Congress, through the TRHCA, made the RAC program permanent and authorized CMS to expand the program to all 50 states by 2010 before the demonstration was completed and a full assessment of the program was made.
  
• RACs use their own proprietary software and systems, along with their knowledge of Medicare rules and regulations to determine which areas to review. Currently, Medicare’s National Coverage Determination for Implantable Automatic Defibrillators does not specify whether or not a patient undergoing an ICD procedure should be admitted into the hospital or placed in outpatient observation. This lack of clarification has and will continue to result in questionable judgment if an overpayment has taken place. Borderline claims will most likely rollover into the error category.
  
• It is unclear to the Heart Rhythm Society whether the determinations made to recoup payment for certain ICD procedures performed on an inpatient basis were determined using evidence based criteria because the criteria have not been made public. The Society believes it is unfair to apply criteria that are proprietary because physicians cannot make a good faith effort to abide by criteria that are not transparent. Lack of transparency in guidelines hinders the Society's ability to educate its members.
  
• The Heart Rhythm Society was not consulted in the development of the criteria used during the demonstration to review hospital device implant procedures, nor are we aware of any other cardiovascular medical societies that were consulted on the development of criteria.

Actions Taken to Address Concerns

• The Heart Rhythm Society submitted a letter of support for the Medicare Recovery Audit Contractor Program Moratorium Act, which would place a one-year moratorium on the RAC program until a full assessment of its appropriateness and flaws have been completed.
• The Society met with CMS officials in April 2008 to discuss concerns with the RAC program and its impact on the quality of care for patients receiving ICD and CRT-D devices.
• The Heart Rhythm Society will work with McKesson (a vendor of clinical software applications, e.g., InterQual, used by hospitals, insurance carriers, and other public and private companies) to review the content that makes up their clinical management software products for ICDs and CRT-Ds.
• The Society issued a Member Advisory to alert members and help improve their preparedness for the arrival of the RAC program.
• The Society will consider setting clinical recommendations for hospital admission vs. outpatient observation for ICD and CRT-D procedures.

How to Prepare for a RAC Review

It is critical that Heart Rhythm Societymembers become informed about the RAC program and be prepared for its implementation. There are a number of activities that physicians and their staff can undertake to prepare for the implementation of the nationwide RAC program, including:

• Examine the RAC demonstration project and CMS RAC Status Document FY 2007 (PDF, 256K) on the RAC program to identify possible target areas;
• Perform a prospective audit or review of perceived vulnerabilities and take corrective actions;
• Develop an internal processes to respond to RAC requests, and determine who within your organization will receive communications;
• Educate leadership and compliance personnel about the RAC program; and
• Know how to navigate the Medicare appeals (PDF, 1.3M) process (and the possible arguments and defenses to RAC determinations).