Pathology/Lab Coding Alert

Establish contact person to track audit compliance.

Maybe your lab hasn't faced an audit from a Recovery Audit Contractor (RAC), but if you provide services for Medicare beneficiaries, you should get ready. RACs Seek Improper Payments

RACs can look at coding and other information on your past claims to make sure you're following CMS compliance rules for lab and pathology services. Know these quick facts about RACs to be better informed:

• RACs detect and correct past improper payments so CMS and can prevent such problems in the future
• RACs are hired as contractors by the government, and they can collect "contingency fees," which means that they get a percentage of the amount that they recover from providers who were paid inappropriately
• The maximum RAC lookback period is three years, and they cannot review claims paid prior to Oct. 1, 2007
• Between 2005 and 2008, RACs involved in the original demonstration project recovered over $1.03 billion inMedicare improper payments, but referred only two cases of potential fraud to CMS, according to an Office of Inspector General (OIG) report on the topic. The report, noted that "because RACs do not receive their contingency fees for cases they refer that are determined to be fraud, there may be a disincentive for RACs to refer potential cases of fraud."

Prepare for RAC Audit

CMS has some advice for how to get ready to respond to RAC auditors:

• [Develop] a RAC team to coordinate all RAC activities that may include tracking audit and appeal findings, identifying patterns of error, implementing corrective actions, etc.
• Consider assigning a point of contact, and if necessary, an alternate ... and tell the RAC the precise address and contact person to use.

Read more: You can find this and other advice in the MLN Matters article at www.cms.gov/MLNMattersArticles/downloads/SE1024.pdf.

RAC audits take resources: "We had a RAC audit requesting repayment for using the wrong national provider identifier (NPI) number -- due to changes that weren't communicated to us when we switched from Blue Cross/Blue Shield to Wisconsin Physicians Service," says Stan Werner, MT (ASCP), administrative director of Peterson Laboratory Services PA in Manhattan, Kan. "We spent hours researching, refunding, and then rebilling the claims under another NPI number -- just to get paid the same amount we refunded while the RAC took 10 percent."

"That's not an efficient way of doing business," Werner says. "But make sure you investigate all RAC requests and comply in a timely manner," he advises.