Sometime early this year, CMS will restart the Recovery Auditor (RA) program.

CMS issued new contracts for the recovery audit contractor program on Oct. 31, 2016, and is expected to start the program in the first quarter of 2017 if none of the organizations who lost the bid have filed a protest with the Government Accountability Office. The previous Recovery Audit program ended Oct. 1, 2016.

When the new program begins, RAs in the four regions will perform post-payment review of claims made under Part A and Part B. A fifth RA will audit durable medical equipment, prosthetics, orthotics and supplies, and home health and hospice providers.

The return of the RAs means case managers should continue working with physicians to get patient status correct and ensure documentation is complete and detailed, says Steven Greenspan, JD, LLM, vice president of regulatory affairs for Executive Health Resources in Newtown Square, PA.

Greenspan recommends that case managers stay informed about what is going on with CMS and other payers so they’ll be prepared when changes are made in requirements or when the hospital will need information for appeals.

It is unclear whether the auditors are allowed to look at any issue CMS has already approved under the prior RA contracts or if they will have to start the approval process all over, Greenspan says. “We do know that short-stay patient status claims are basically off the table for the recovery auditors. The two Beneficiary and Family-Centered Care Quality Improvement Organizations [QIOs] will continue conducting reviews of hospital inpatient claims for stays of less than two midnights,” Greenspan says.

If the QIOs find a pattern of noncompliance during the short-stay reviews, they can refer hospitals to the RA for further review and corrective action, Greenspan adds. However, CMS has not been specific on what a pattern of noncompliance actually means, he says.

The new contracts allow CMS to incorporate a number of significant changes that are intended to increase transparency and lessen the burden on providers, Greenspan says.

For instance, CMS has shortened the look-back period to six months instead of the three-year timeframe in the previous program as long as the provider files its claims within three months of the date of service.

The new RAs will have 30 days to complete complex reviews and notify hospitals of their findings instead of the previous 60 days. After issuing a denial, the RAs must wait 30 days before sending the claim to the Medicare Administrative Contractors (MACs) to process the denial, he adds. The delay is to give hospitals a chance to request a discussion with a RA medical director.

If hospitals appeal denials, the Recovery Auditors will not get paid contingency fees until the denial is affirmed at the second level of the appeals process. In the old program, RAs were paid as soon as the overpayment was identified.

The RA reviews have to be conducted by individuals with medical knowledge and an understanding of medical records review. The organizations have to have at least one medical director who is a physician and approved by CMS, Greenspan says. He notes CMS encourages RAs to use the expertise of a panel of clinical specialists for consultations when performing a medical review.

CMS made enhancements to the program in 2015, one of which requires RAs to maintain an overturn rate of less than 10% at the first level of appeal and to maintain an accuracy rate of 95%. Another program enhancement restricts the RAs’ additional documentation requests to 0.5% of the provider’s total number of paid bills for all types of claims in the previous year. The program enhancement also requires RAs to wait 45 days between additional documentation requests and restricts them from sending the requests more than eight times a year.

CMS reopened its inpatient status appeals settlement program that allows hospitals to settle appeals that are still under review. The new program covers only claims denied by any Medicare contractor for hospital services before Oct. 1, 2013, with appeals pending before an administrative law judge or the Departmental Appeals Board.

CMS is offering to pay hospitals 66% of the net allowable amount for denied inpatient claims if they settle, Greenspan says.

Hospitals can’t choose which claims they want to settle but must include every eligible claim in the settlement process, Greenspan says.

CMS made a similar one-time offer to hospitals in 2014 in an effort to clear up an 18-month backlog of patient status claim denial appeals. At that time, CMS offered to settle for 68% of the net allowable amount of the denied claims.

Hospitals will have to decide if settling for 66% of the net allowable amount of their denied claims is in its best interest, Greenspan says. However, he points out that the turnover rate at the administrative law judge level has been trending downward. “In the early days of the recovery auditing program, more than half of the denials were overturned. Now it’s closer to 25%, according to recent figures posted by the Office of Medicare Hearings and Appeals. This is puzzling because it should be fairly consistent,” he adds.