R A C

The RAC program has been established to identify and recover improper Medicare payments to providers that are under fee-for-service Medicare plans, including medical practices, hospitals and nursing homes.

Practices that bill Medicare may be subject to an audit to review inaccurate reimbursements and may be required to refund the money back to Medicare. There are four RACs, each pertaining to a region of the country. 

Types of government audits :

Medicaid Integrity Contractors (MICs) conduct audits of Medicaid claims instead of Medicare. Unlike RACs and Zone Program Integrity Contractors (ZPICs), whose appeal processes are determined by federal regulations, MIC appeals processes vary by state.

ZPIC audits look for cases of fraud by analyzing claims data.

Medicare Administrative Contractor (MAC) audits determine whether particular billed services are medically necessary and should be covered under Medicare.

Looking to eliminate Medicare overpayments to providers, the Centers for Medicare and Medicaid Services from 2005 until early 2008 conducted pilot tests of a new program to audit provider billings, called the Medicare Recovery Audit Contractor program.

Medicare started rolling out the RAC program nationwide during 2009. But 2010 was when its effects were widely felt by hospitals, with some health systems undergoing multiple RAC audits while others were notified they'll soon be up to bat. CMS intends to eventually audit all U.S. hospitals, and is now expanding the RAC program to physicians, laboratories, pharmacies and other providers.

There was no shortage of health care payer audit programs before RACs came around. Medicare already conducts audits under the Medicare Administrative Contractors program, state Medicaid agencies have audit programs, and so do commercial insurers and quality improvement organizations. And a proposed federal rule published in November 2010 has put the wheels in motion for establishment of Medicaid RAC programs.

Lately, commercial carriers are starting to copy RACs and that has really increased audits across the country.

RAC Audits :

There are two types of RAC audits-automated and complex. An automated review, also called a claims review, is a computerized analysis of a provider's Medicare claims based on algorithms that look for specific discrepancies in the claims. These include medical procedure that don't match the patient's age or gender, inpatient claims without a discharge disposition, or two or more units for a colonoscopy when only one unit can be billed a year.

Medicare has contracted with four companies to serve as the Recovery Audit Contractors in four regions that span the nation. These contractors can and do subcontract with other companies to conduct audits.

RACs can conduct an automated review anytime without notifying providers. Following an automated review that finds discrepancies, a RAC will send a "demand letter" to a provider organization identifying the overpayments found and stipulating reimbursement. RACs also are finding underpayments in favor of providers, but those account for about a fifth of the findings.

Under a complex audit, RACs can demand up to 300 medical charts from a hospital every 45 days, based on Medicare claims volume, for comprehensive review. These charts include any paper and electronic documentation that support a flagged encounter.

How RACs work :

The biggest difference with the RAC program compared with other payer audits is how contractors are reimbursed. Contractors for other audit programs get paid a fixed amount for doing their work. But RAC contractors get paid via contingency fees. They make money finding overpayments and underpayments, and the more they find the more money they make. So, RACs tend to be more aggressive than other audit programs.

The payment set-up for RACs has been perceived as bounty-hunting by many industry stakeholders.

Physician practices also fall under the RAC program. The number of records that can be demanded every 45 days for a complex review is based on the practice size and tops out at 50 for the largest practices. RAC auditors spent much of 2010 focused on automated reviews of hospital claims, which give quick results and cash in the door, with complex hospital reviews and physician audits starting to build toward year-end.

Following the receipt of a demand letter, a provider can appeal the findings and present documentation to support its position.

After a provider submits the requested medical records for a complex audit-with the RAC contractor, the contractor then has 60 days to review the records and inform the provider of findings.

Providers increasingly are using software specifically designed for the RAC program and embedded with the RAC rules to manage request fulfillment within 45 days, and generating supporting documentation to use during the appeals process.

ACOs In Practice

The accountable care organization ( ACO ) is a new model that has been proposed for health care reform.

The primary objectives of the ACO are to reduce costs, increase efficiency and improve the quality of patient care. The payer is basically aiming to reduce costs and at the same time improve quality of care. Since payers would give the ACO's a lump sum to cover all care, the ACO's would retain any savings that result from more efficient patient care. This is supposed to be the motive for physicians and hospitals to ensure that the patient is healthy and out of the hospitals and not do more procedures.

The ACO members will  share in the savings that results from their cooperation and coordination. Thus, ACOs can–theoretically–act as a reform tool by incentivizing more efficient and effective care. This would help to combat the current perverse incentives of overutilization and overbuilding of health care facilities and technology.

ACOs In Practice :

The ACO would have to be a legal organization that can receive shared savings, and would have to incorporate primary care physicians who solely practice under the ACO. Furthermore, there would have to be at least 5,000 beneficiaries in the ACO for it to be viable. The ACO would provide CMS with a list of their providers willing to participate in the ACO. The beneficiaries would be determined by, among other things, the patterns of patient referrals in the region. However, beneficiaries would not be “locked in” to a given provider. The ACO would receive savings if their risk-adjusted, per beneficiary spending levels were below their benchmark.

 

An Example :

An hypothetical independent practice association (IPA) teams up with a community hospital to create an ACO. Medicare determines a benchmark, that is, what it will cost to treat the average beneficiary in that geographic area per year–let’s say $10,000. The physicians submit their traditional claims to Medicare under the RBRVS system while the hospital submits its typical DRG-base claim. Thus, the traditional fee-for-service system remains in place. At the end of the year, Medicare determines if the ACO has provided care for less than $10,000. If they have, the ACO is entitled to share in the cost savings, and the savings are divided among the providers and hospital. Though simple in theory, ACOs become more difficult when attempting to construct payment models that will distribute the savings of the ACO to the individual providers.

ACO

The primary objectives of Accountable Care Organizations (ACO) are to reduce costs, increase efficiency, increase accountability and improve the quality of patient care.

The payer is basically aiming to reduce costs and at the same time improve quality of care. Since payers would give the ACO's a lump sum to cover all care, the ACO's would retain any savings that result from more efficient patient care. This is supposed to be the motive for physicians and hospitals to ensure that the patient is healthy and out of the hospitals and not do more procedures.

The patient is supposed to get better care and this model aims to provide a patient centric care plan. The physicians may need to do a lot of  screening procedures and wellness checkups ensuring that the patient is taking the right labs and medicines and staying healthy. So the clinical perspective would be that of being proactive and ensuring that the patient requires the right care ensuring that he is in good health, and that he makes as few visits to the Hospital as possible. This is to mean that the physician will proactively care for the patient, instead of the regular model of treating patients after a health event.

Challenges :

• ACO's would find it a challenge to construct a payment model that would distribute the savings of the ACO to its individual providers.
• The patient may feel  that he is being forced to see a small group of physicians in the ACO that he is participating.
• The patient may not perceive the quality of care that the ACO model proposes.
• Would patients continue to stay within their ACO ?
• Would patients see value in the ACO and support the ACO ?

ACO's have a lot of challenges ahead but it looks very viable and feasible considering the advantages is has over existing HMOs, but then again there are some physicians who feel that the ACO's are a little ahead of time, and now may not be the good time.

The ACO debate is endless but its success or failure will depend on how the patients perceive it. If the patients see value for themselves in the ACO than the patients would support the ACO and it will succeed, if the patients do not see any value from the ACO than it would be very difficult for the ACO to succeed.