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Understand Physical Therapy RAC Audits- 5 Tips

January 16, 2014 0 Comments

Physical therapy RAC audits are well underway by the Recovery Auditors (RACs) in all 4 RAC regions.  physical therapy RAC auditsHave you been on a roller coaster ride trying to figure out what is happening when you respond to the ADR to submit physical or occupational therapy documentation for review?  Feeling “up” when your ADR submission via fax or certified mail is timely?  Feeling “down” when you learn fax never arrived, and the mail room must have lost the documents after they signed the USPS green card receipt?

ATRA Legislation Setups Physical Therapy RAC Audits

ATRA legislation setup manual medical review of therapy claims over the $3700 thresholds on a prepayment review basis in 2013, and this has been extended through March 31, 2014 in the SGR legislation..  The Medicare Administrative Contractors started reviewing claims by the end of January (meaning there were beneficiaries that had exceeded $3700 in Medicare allowable fees), as CMS looked for a more permanent solution, which they found in the Recovery Auditors.  For claims received after 4/1/2013 the RACs took over the review, and the implementation was slightly different than the legislated called for, so CMS sought Congressional approval.

5 Tips You Need to Succeed in Physical Therapy RAC Audits

  1. Understand the Prepayment Review Rules: Therapy providers in RAC Prepayment Review states (a CMS demonstration program) will have their claims reviewed on a prepayment basis within 10 working days.  The prepayment review states are: FL, CA, MI, TX, NY, LA, IL, PA, OH, NC, and MO.    If the RAC cannot review the claims within 10 business days of receipt in one of the above prepayment review state, they will so indicate to the MAC and the MAC pay the claim. Best Practice: Visit your RAC’s website, and give their customer service a call to ask any questions that you have and inquiry as to their 10 day review history and process.
  2. Understand the Post-payment Review Rules: Providers in the remaining 39 states will have claims over the $3700 threshold paid by the MAC, but notice sent to the RAC that they are subject to post-payment review. CMS has encouraged post-payment reviews to take place within 10 days, but have not held the RACs to this standard.  (Providers can hold on to their $$ a bit longer). Best Practice: Consider establishing a reserve account for all claims that go over $3700 in the event of a demand letter for payment whether or not you appeal.
  3. Track Threshold Utilization:  This may be easier said than done because of the changing nature of charges applied toward the threshold that are calculated in the Medicare database, but it will help prep therapists and office staff alike that documentation will be audited, so preparations can begin administratively and documentation can be taken up a notch to explain the need for therapy over the cap and threshold. Best Practice: consider an EMR program that will assist in tracking beneficiary utilization.
  4. Assemble All Requested Documents and Prepare Cover Letter: Submit your documentation with the ADR letter as instructed and attached all documents in an organized fashion.  Include a cover letter with a brief navigation guide and a checklist of everything you have attached, and indicate those requested documents that you didn’t attach and why (such as radiology or nurses reports that are not relevant). Best Practice: include brief summary of the entire episode of care as if you were at grand rounds!
  5. Track ADR Submissions Through the Audit Process: Setup a spread sheet or other tracking tool and carefully monitor all the timelines as you process each ADR. Best Practice: Utilize the CMS esMD program via a certified vendor to ensure HIPAA compliant transmission that is guaranteed. See my posts here and here.

 Next Steps When Responding to Physical Therapy RAC Audits

Providers in post payment review states are reporting being over whelmed with ADR request going back to April, 2013.  Rather than be surprised by the lateness of the records request, be relieved that you got to keep your money a bit longer.  Take the opportunity to review all claims over $3700 and put them on your tracking spreadsheet and begin to prepare the ADR packets for submission.  All providers should concurrently audit their documentation to ensure that the reason for therapy over the cap and over the threshold is documented, and that all Medicare and local coverage determination criteria are met.  And certainly communicate with other providers about this process, this is one area where the hospitals have learned to share, competition aside, and nationally there is a better understanding of the process and a better ability to fact find, problem solve and lobby Congress for effective changes in the system that don’t over burden providers.

How are you handling RAC requests?  What are your best practice tips?

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Nancy Beckley

Nancy J. Beckley MS, MBA, CHC: President-Nancy Beckley & Associates LLC. Compliance outsourcing, risk assessment, compliance plans, compliance training, auditing, due diligence, investigation support for therapy providers.

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