RAC rules finalized

T-minus 10 weeks to get ready

The final rule related to recovery audit contractors (RACs) for Medicaid was released in mid-September (http://www.gpo.gov/fdsys/pkg/FR-2011-09-16/pdf/2011-23695.pdf), just over three months before it goes into effect. It provides a variety of guidance and opt-outs for states that have many compliance experts scratching their heads.

The final rule includes the following provisions:

• It requires that RACs

— hire a full-time medical director who is either an MD or DO;

— hire certified coders unless the state deems otherwise;

— let providers know their audit policies and protocols;

— limit reviews to the three years after the event being audited;

— establish a set limit on the number and frequency of records requested.

• It allows states to determine how to extrapolate audit findings, externally validate RAC findings, and decide what kinds of claims should be audited.

• It prevents audit of claims that are already being audited or have been audited by another entity.

• It requires repayment of any contingency fee if on appeal, a determination is reversed.

• It requires states to provide incentives for determining underpayments.

• It allows exclusion of Medicaid managed care claims.

"For me it is a lot of uncertainty," says Monica R. Freedle, corporate compliance project specialist at Legacy Health in Portland, OR. Her organization operates in two states that are on different timetables for finalizing just what the rule means in each. Oregon appears to be "taking the liberties in the law to use all the exceptions," she says. Meanwhile, as of press time, there was virtually no information on what Washington is doing. Freedle says she probably has the best and worst of it — Oregon being a little ahead of the curve compared to most states, and Washington a little behind.

Lack of definition

Legacy has already been introduced to the Oregon auditor, but there is not even information on who the Washington RAC will be. "I'm dreading all this lack of definition right now," she says.

What Freedle does have are some vague projections. She knows that Oregon is choosing to look back the full seven years, but that might be 100 charts per quarter, or 400 every 75 days for each of the five hospitals. "Nothing is defined, although they seem in Oregon to be willing to work with extensions. We don't know how aggressive they will be, though, and it's hard to proactively guess."

If the number of charts required is at the higher end, Freedle thinks she may have to make some new hires to handle the additional work. But she can't plan on that yet. Meanwhile, she has a concern about how being an organization on two state borders will affect her operation. "It is possible with a hospital right on the border that we will have Washington audits for Oregon hospitals and Oregon audits for the Washington hospital."

Freedle says she is happy that most of the processes the RACs in both states will follow are already established. It is, in a world of unknowns, one thing she is counting on.

For more information on this story, contact Monica R. Freedle, Corporate Compliance Project Specialist, Legacy Health, Portland, OR. Telephone: (503) 225-6260. Email: mfreedle@lhs.org.