Unfortunately, this is not a simple question… We thought this needed some clarification, at this time.
We have mentioned before that the RACs take back 100% of a claim when they issue a demand letter. (See Can I Resumbit? and Principal Diagnosis for examples). We stand by those posts, but perhaps they need some explaining. You should consider them accurate, however, given past experience. During the pilot program, the RACs demanded 100% and very rarely allowed any resubmit of a claim. In the future, however, there may be some different experiences, depending upon the prevailing winds, the attitudes of any specific RAC program contractor, and perhaps the price of tea in China, who knows.
At eduTrax we are dubious that the RACs will demand less than 100% of a contested claim, since they are authorized to do so (currently), and they are, after all, PAID based upon the dollar amounts that they recoup. See how much they make HERE.
We do allow that there is the possibility that a RAC will only demand the difference between their interpretation of the correct payment versus what was actually paid. But we’d like to point out that there is no reason to believe that the RACs actually participate in the program out of any altruistic concerns for the state of healthcare in the USA.
The RAC contractors participate for the oldest reason there is — they are well paid to do so, and the more they recoup, the more they profit. See our post on the recent delay in the program, initiated only due to legal wrangling by two firms who lost out on their bids to become RAC contractors. See the news article about it on our Latest News page, at www.myedutrax.com.
The only good thing we can say is that, absent any fraudulent activities or intent, the MOST they will demand is 100% of the specified reimbursements.
We realize that is not very reassuring. Many of our clients have decided to reserve 100% of reimbursement for any cases they can internally identify as problematic, through our audits and use of our courses and tools. We believe this to be a wise practice. We can all hope that they can only lose the difference between the amount that should have been submitted, versus the amount that was filed and paid. But there is, at this time, no evidence to support that hope.
For the sake of argument and to explain further, the possibility exists that RACs will only demand the difference between the correct versus the incorrect reimbursement. For example, as we explained in Too Late to Query, using an incorrectly coded case for a secondary diagnosis, if a RAC demands the entire amount of the claim, then the facility is out about $9000. If however, the RAC only demands the difference between the correct & incorrect coding, the facility is only (only?) out about $3000. The problem we have with this idea/hope involves the motivation of the RAC: they are in this for profit, nothing else. Let’s call these “fees” commissions, which is more accurate…
The difference between the two potential demand letters is $9000 versus $3000, a difference of $6000. The commission for the Region A RAC is 12.5%: the choice then is $1125 versus $375. Why would the RAC choose the smaller commission?
Of course, the RAC must return any commissions paid to them for demands that are successfully appealed. We have seen that the likelihood of appeals is low (less than 15% were appealed in the demonstration project) and the likelihood of being overturned on appeal is even lower (less than 5% were overturned). (Find the CMS Report here.)
And finally, there’s this — the AHA has estiimated that it costs a provider an average of $2000 to file an appeal for a claim in the RAC process.
So, armed with that knowledge, how many claims will YOU file appeals for?
Now you know why we’ve said the RACs will take 100% of the claim, not just the difference between the right and wrong reimbursements. There’s no incentive for them to NOT take 100%.
recovery audit contractor
