Article Series: RACS and Case Management- First Article!

RACS and Case Management

Here it Comes: Permanent CMS RAC Audits Expanding to a State Near You

By Randi Ferrare for the Arizona Case Management Blog
July 21, 2008

Unless you have been comatose in an intensive care unit, you’ve heard horror stories about the CMS RAC (Recovery Audit Contractor) demonstration project that, along with the real estate market, has been wreaking havoc for the last three years in Florida, California and New York.
This unbounded, wildly successful program has allowed CMS to recoup “overpayments” totaling close to $1 billion dollars, resulting in Congress passing a permanent CMS audit process to roll-out to all states by 2010.

The “RAC” will be called the “MAC” (Medicare Administrative Contractor).
During the demonstration project period, I made many Hospital Administrators and Board of Directors aware of the urgency and reality of the CMS RAC audit program during presentations.
Often to lighten the somber mood in the room, I pointed out that the RAC audit program does have a silver lining to its unprecedented 40%-45% denial rate of reviewed medical records. That silver lining is the CMS Trust Fund.

The CMS Trust Fund ensures that monies spent by the generations following baby boomers into retirement, will be replenished with money that has been recouped from “unnecessary hospitalizations”. Hopefully to ensure that our subsequent generations will be able to collect Social Security benefits, as our parents and grandparents have.

Much to the dismay of hospital CFOs everywhere, the RAC program is expanding and can’t be avoided. As stretched as it is today with the ever growing debt of charity care and costly medical advancements in technology coupled with the physician demands for this latest technology, the healthcare dollar will only go so far. For the lucky few who have been able to have even the slightest positive bottom line, this program is a real threat and can’t be taken lightly.

For the hospitals on the front line during the RAC Audit program in the demonstration states, they are weary yet enlightened. Weary with all the added work, expense, staffing challenges and multiple process changes to deal with the audit. Enlightened because they are ahead of the curve.

For the hospitals that are yet to be part of the program, the task of preparing can be downright frightening.

To help get brought up to speed, there is a 62-page document titled, “ The Medicare Recovery Audit Contractor (RAC)- An Evaluation of the 3 Year Demonstration” available from CMS. You’ll find this document on the CMS website (located at http://www.cms.hhs.gov
). It contains a wealth of information, both good and bad. It is quite an impressive document, examining what worked, what didn’t, and what changes are in store for the permanent “MAC” program.

At the very least, take a quick look and thumb through it. To help your Hospital join the “enlightened” forward on the Executive Summary to your “powers that be”.

Click here to access a copy of The Medicare Recovery Audit Contractor (RAC)- An Evaluation of the 3 Year Demonstration:
http://ohcci.com/docs/RAC_Demonstration_Evaluation_Report.pdf