RACs, he reported, collected $980 million from March 2005 through March 2008. Of that amount, 84% was collected by inpatient providers, followed by outpatient hospitals, 14%. He said the total cost to run the RAC demonstration was $205.1 million as of July 2008.


In what began as demonstration project in three states — California, New York and Florida in March 27, 2006, CMS is readying to rollout the program with the announcement expected soon of four independent contractors to run the new national Medicare Recovery Audit Contractor program in September.


CMS concluded a demonstration project for the audit program earlier this year and announced plans to expand the program nationally based on the success of the pilot in recouping Medicare overpayments, primarily to hospitals. Under the program, independent auditors review claims, often requesting that providers submit detailed records to demonstrate that the billing was properly documented.


For the new national RAC program, the four contractors will continue to send their requests for medical records via postal mail, according to CMS. Providers will be able to submit the records via the US Postal Service, fax or CD or DVD.


Under consideration by CMS is a means by which providers could electronically upload imaged medical records to the RAC.” As planned, each RAC will develop and implement a Web-based application that allows providers to see the status of each medical record request.


In response to hospitals’ complaints during the RAC demonstration about being inundated by requests for records, CMS plans to establish a limit on the number of records that can be requested during each 45-day period. That limit will be posted on the CMS Web site,cms.hhs.gov/RAC, along with the state-by-state phase-in schedule.


In the new national program, Medicare claims from physicians as well as hospitals will be subject to audits, according to CMS. RACs are expected to choose and review any claim that is likely to contain an improper payment.

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