A notification letter arrives. What next?


First, review the letter to determine if it is a notice of overpayment or underpayment.(1) If it is an underpayment notice, there is no rebuttal (discussion) or redetermination (appeal) process, because none is needed.(2) The amount the claims processing contractor (CPC) reimbursed on the claim(s) in the notification was less than the correct Medicare reimbursement amount, therefore additional payment is due to the billing entity.


While this correspondence seems very clear, the discussion and/or appeal requests tied to underpayment notices have been troubling. Be sure to review the underpayment notice, and if the audit finding is accurate, accept the additional funds. Remember that RAC activities involve identification of both overpayments and underpayments.(3)


If the notification letter is for Medicare overpayment, here are some quick tips:


1) Carefully review the claim(s) audit list and overpayment rationale as soon as the information is received. An overpayment notification may be issued if requested medical records are not received by the RAC within 45 days of the initial request after one additional contact requesting the medical records has been made.(4)


2) Assess each claim to determine if documentation exists that could alter the audit finding (for example, the submitted claim shows four units of service billed/paid, however, RAC audit documentation shows eight units of service).(5)


3) After notification review, if supportive documentation does not exist, decide on the recoupment option that best meets your needs. Make sure you understand your CPC’s preference so there is clean accounting for any recoupment payments. Recoupment is not initiated until 41 days after receipt of the demand letter (automated reviews) or review results letter (complex reviews).


4) If supportive documentation exists that could alter the overpayment determination, contact the RAC and initiate a discussion.(6) Doing so does not impede the appeals process, and it may make it unnecessary if the RAC agrees to overturn its determination.


The discussion period is not part of the appeals process; it is a CMS RAC feature considered to be outside of the Appeals process. Remember, the RAC is only reimbursed for claims that are not appealed successfully.(7)


The benefits the discussion period offers include a direct conversation with a RAC provider services representative to gain clarification/understanding of the audit finding rational, to obtain further RAC direction on data submission that could stop recoupment and/or to present additional information that supports an overturning of the overpayment determination. The discussion period allows you and the RAC to validate whether additional information exists that could alter the RAC determination.


In the discussion period, the RAC representative is there to ensure that all relevant information has been reviewed to support an improper payment determination. If or when an organization provides additional information that alters the initial payment decision, it is to the RAC’s advantage to overturn the audit finding. This process not only reduces the RAC program’s appeals costs, it also reduces the program’s potential for false positive audit results.


The provider advantages include but may not be limited to  identification of best response practices to RAC audit notifications,  recognition of data sets needed for responding to RAC medical record requests and discovery of healthcare documentation and/or billing practices that need further quality control assistance.


Also, this is an opportunity to build a good relationship with your RAC. Prepare the information and presentation before contacting the RAC. Unorganized calls are less productive and often present a missed opportunity for results-based discussions and information.


(1) RAC Statement of Work (SOW), Task 3-Underpayments, Pages 27-28 for Underpayment processes (www.cms.gov/recovery-audit-program/).

(2) RAC SOW, Task 3-Underpayments, Page 27 for underpayment details.

(3) RAC SOW, Task 2 Identification of Improper Payments, Page 6 and E. The Claim Review Process, Pages 14-16 for improper payment types.

(4) RAC SOW, Task 2-Identification of Improper Payments,  D. Obtaining and Storing Medical Records for reviews, 3. Assessing an overpayment for failing to provide requested medical records, Page 13.

(5) RAC SOW,  E. The Claim Review Process. 7. Automated Review vs. Complex Review, Pages 17-19 for review details.

(6) www.cms.gov/RAC/Downloads/ProviderOptionsChart.pdf, RAC Overpayment Determination

(7) RAC SOW, Task 7-Administrative and Miscellaneous Issues,  C. Payment Methodology (Page 43) last bullet regarding RAC return of payment for Appeals adjudicated in provider’s favor.


RAC provider services representatives are there to assist each caller with questions, issues and/or concerns. He or she may need to research requests to ensure delivery of accurate and complete information. If your RAC representative does not provide the information requested, ask to speak with their supervisor.


About the Author


Vickie Axsom-Brown is a 20 year managed care veteran with diverse experience in administering private, state and federal health care services.  Management experience includes vice president, Region D RAC services (Principal Lead for CMS and Claims Processing Contractors and HDI services), CEO/COO of multidisciplinary, multi-sites adult and pediatric medical/surgical providers including oncology/radiology services, laboratory services, ambulatory surgery centers, upright MRIs, PETs, et. al.


Contact the Author




To comment on this article please go to editor@racmonitor.com


Natural Disasters and the Homeless: Could 2011 be the Year Hospitals Become Shelters?

Share This Article