ED Coding and Reimbursement Alert

If you’ve taken a hit from RAC auditors, think twice before just writing a check for alleged overpayments.

ED groups are an attractive target for auditors because the size of the groups tends to be much larger on average than other specialties. This means when audits identify overpayments, the potential for recoupment is larger because of the volume of claims reported by the group. The cost of extrapolation with these volumes can get expensive very quickly so you should appeal any audits that seem unfair or inaccurate.

Check out this scenario from Ed Gaines, JD, CCP, Chief Compliance Officer at Zotec Partners in Greensboro, North Carolina on why you should appeal. 

An AMA survey found that the average RAC audit overpayment amount was $86 per claim. However, the average cost of a RAC audit to a medical practice is approximately $110 per claim. So doing the math, there’s a net loss of each RAC audit appeal per claim of -$24.00 ($110 cost less $86 overpayment average).  Initially this appears to add additional expense and it would be cheaper to just write a check for the overpayment amount. 

However if you consider that CMS data shows that 60 percent of appeals are successful at levels 1 through 4, it is in your best interests to go through the appeals process if you are confident your code assignments are correct.  The net reduction in the overpayment could offset much of the cost of the appeal process. You also mitigating risks of Progressive Corrective Action (PCA), statistical sampling and extrapolation, advised Gaines. 

You Want To Avoid Extrapolation If You Can

RAC Extrapolation is a method of forecasting the results of an audit sample to the universe of claims from which the sample was drawn. It is used to project an error rate, such as 10 percent, across all Medicare claims from that provider. 

But be advised that the Medicare statute does NOT permit extrapolation unless there is “a sustained or high level payment error,” or a “documented educational intervention” has failed to correct the payment errors.  

CMS has utilized one or more of the following to identify a sustained or high level payment error, says Gaines. 

• Medical review by any contractor
• Probe or data analysis
• History of provider audits/probes
• Information from law enforcement.
• Allegations of wrongdoing
• OIG audits or wrongdoing

Good Reasons for Appealing MAC/RAC Findings

• The decision to use extrapolation cannot be challenged on Medicare appeal or in the federal courts, 42 USC 1395fff (d)(3), 42 CFR 405.926 (p) and MPIM 8.4.1.2.
• The extrapolation methodology to determine the overpayment is subject to challenge on appeal and in the courts.
• The MAC/RAC methodology is presumed valid, and burden of proof is on the provider.
• CMS Ruling 86-1. This ruling provides that CMS and the MACs may use statistical sampling to project overpayments when claims reflect a pattern of erroneous billing and case by case review is not administratively feasible.