Compliance Update
Recovery Audit Contractors Now Operating in Massachusetts
There has been a lot of concern about Medicare’s new contingency-fee auditors, called Recovery Audit Contractors, or RACs. RACs are paid only when they identify mispayments to Medicare providers, and then are paid a percentage of the amount Medicare recovers. These RACs were created under the 2003 Medicare Reform law, and began as a three-state pilot in California, Florida and New York, but Medicare included Massachusetts in this pilot late last year.
BWH and other Partners entities received a series of records requests and audits from the RAC in November 2007. At BWH, the Compliance Office adopted a team approach to addressing this disturbing trend and to analyze these audits. PHS PFA, Chargemaster, Revenue, HIS, Compliance and Care Management all participate in the BWH response.
By the end of 2008, RACs will become a permanent fixture in the regulatory landscape in Massachusetts. CMS just recently released a report that indicated that the RACs in the three initial pilot states have returned close to $300 million to Medicare in 2007. Inpatient hospital and outpatient hospital claims constituted in excess of 80 percent of this amount. There is every indication that the RACs will continue to focus their attention on hospitals in their auditing activity going forward.