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RAC Program: Nursing & Healthcare Facilities Face Increased Exposures

Posted on: October 10, 2012 by Caitlin Morgan

RAC Program: Nursing & Healthcare Facilities Face Increased Exposures

RAC Program: Nursing & Healthcare Facilities Face Increased Exposures

The Medicare Recovery Audit Contractor (RAC) Program was initially started as a pilot program in 2003 under the Medicare Modernization Act. The objective was to identify Medicare Part A and B underpayments and overpayments, and to recover the latter – basically to find and prevent waste, fraud and abuse in Medicare. RACs are paid on a contingency fee basis, receiving a percentage of the improper overpayments and underpayments they collect from providers.

The pilot program took place in California, Florida, New York, Massachusetts, South Carolina and Arizona. There was over $900 million collected so the program went national under the Tax Relief and Health Care Act of 2006. RACs may review the last three years of provider claims for the following types of services:  hospital inpatient and outpatient, skilled nursing home, physician, ambulance and laboratory, as well as durable medical equipment.

The types of errors typically found include information such as: the medical record did not support the claim; discharge status/transfers – claim indicates discharge to home, but medical record indicates beneficiary was discharged to another hospital or home with home care; incorrect number of units billed; medical necessity; incorrect payment amounts; non-covered services; incorrectly coded services; and duplicated services.

But with the increase in audits in addition to the aggressive ways in which the Centers for Medicare/Medicaid Services (CMS) is now undertaking the audits, including conducting electronic audits where a facility may not even know it’s being audited, other violations are being discovered – violations that a nursing home or healthcare facility may not realize it is committing. These include violations involving HIPAA (patient privacy), the HiTech Act, STARK (physician self-referral), and EMTALA (Emergency Medical Treatment and Labor Act).

The audits have been so successful, with $4.1 billion recovered in fraud and abuse prevention efforts in 2011. What’s more, the audits have been expanded into Medicaid. The Department of Health and Human Services (HHS) projects that over the next five years this effort will save $2.1 billion in Medicaid, of which $900 million will be returned to states.

What this all means for nursing homes, healthcare facilities?

Healthcare providers and nursing homes must employ a vigorous focus on compliance and prevention, ensuring that they are aware of all anti-fraud requirements and incorporate good governance practices into their operations. They must also be aware of the myriad of exposures that they face and whether they have the appropriate insurance coverages should they face a violation allegation for privacy and other risks.

Caitlin-Morgan can provide risk management services and an insurance program for your nursing home and healthcare facilities clients. Give us a call at: 877.226.1027.

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