Government Audits and RACs Flashcards
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A hospital receives a letter from a Recovery Audit Contractor (RAC) that requests medical records for 15 inpatient stays to validate the medical necessity of the admissions. This type of review is known as a:
Answer: Complex review
A complex review is one that requires the review of medical records or other supporting documentation to determine if an improper payment has occurred. An automated review does not involve a human review of the medical record and is based on analyzing claims data for clear policy violations. A pre-payment review happens before the claim is paid, whereas RAC reviews are post-payment. A CERT review is part of a program to measure the overall Medicare error rate, not to recover specific overpayments.
What is the primary mission of the Medicare Fee-for-Service Recovery Audit Contractor (RAC) program?
Answer: To identify and correct improper Medicare payments after they have been made.
The core mission of the RAC program is to identify and correct improper Medicare payments through the post-payment review of claims. This includes recovering overpayments and identifying underpayments. Processing and paying claims is the primary role of Medicare Administrative Contractors (MACs). Measuring the improper payment rate is the goal of the Comprehensive Error Rate Testing (CERT) program. Pre-payment reviews are typically conducted by MACs, not RACs.
Which of the following is a key difference between a Recovery Audit Contractor (RAC) and a Medicare Administrative Contractor (MAC)?
Answer: RACs are paid on a contingency fee basis for collected overpayments, while MACs are not.
RACs are paid a percentage of the improper overpayments they identify and collect, creating a direct financial incentive. MACs, who are responsible for the day-to-day processing and payment of claims, are not paid on a contingency basis for audits. Both RACs and MACs are private companies contracted by CMS. While RACs focus on post-payment review, MACs also conduct both pre-payment and post-payment audits in addition to their primary claim processing duties. Both contractors handle Part A and Part B claims.
A physician's office receives a final demand letter from a RAC for an overpayment. The office disagrees with the finding. What is the first level of the five-level Medicare appeals process the office must initiate?
Answer: Redetermination by a Medicare Administrative Contractor (MAC)
The first level of the formal Medicare appeals process is a Redetermination, which is a request made to the Medicare Administrative Contractor (MAC) to review the initial determination. Reconsideration by a QIC is the second level, an ALJ hearing is the third, Appeals Council review is the fourth, and Judicial Review in federal court is the fifth.
A compliance technician is assisting with a documentation request from the Comprehensive Error Rate Testing (CERT) program. What is the primary purpose of this type of government audit?
Answer: To measure the overall improper payment rate in the Medicare FFS program.
The CERT program is designed to measure the improper payment rate for Medicare Fee-for-Service claims by reviewing a random sample of claims. Its goal is statistical measurement, not direct recovery from a specific provider as part of the audit itself (though an improper payment found will be collected). While CERT may uncover issues, its purpose isn't to prosecute fraud; that is the role of entities like the OIG or UPICs. CERT is separate from the RAC program's process for approving new audit topics.
A hospital is preparing for potential RAC audits. The scope of a RAC's post-payment review includes the identification of which of the following?
Answer: Both overpayments and underpayments
The mission of the RAC program is to identify all types of improper payments, which explicitly includes both overpayments made to providers and underpayments owed to providers. RACs look for various types of errors, including but not limited to incorrect coding, services that were not medically necessary, and incorrectly paid services.