Claim Concerns

Prepare for a possible medical group audit with a review of the recovery audit program.Claims Concerns

For nearly a decade, CMS has been developing a new weapon in its arsenal against fraudulent, duplicate, and incorrect claims: medical group audits.

Unfortunately, in light of the recent spotlight on reimbursement cuts, these audits could easily be used as a tool to reduce or even deny reimbursements to radiology and radiation oncology groups. It is important for physicians to remain vigilant in identifying inappropriate or erroneous audit collections.

When the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 passed in Congress, it required the gradual implementation of medical group audits, which are designed to identify and recover erroneous payments paid under Medicare parts A and B. As a result, in 2005, CMS hired for Recovery Auditors (RAs) — formerly known as Recovery Audit Contractors (RACs), on a contingency fee basis. The RAs functioned in six states as part of a pilot project that ended in 2009. Deemed extraordinary successful by CMS, the project was expanded across the United States beginning in January 2010. The following March, with the passage of the Affordable Care Act, the RA program was expanded to include Medicaid and Medicare parts C and D.

How It Works

According to Medicare's explanation of the RA program, RAs do not apply their own guidelines, but "when performing these reviews, Recovery Auditors follow Medicare regulations, billing instructions, [National Coverage Determinations], coverage provisions, and the respective ... [Local Coverage Determinations]. The Recovery Auditors do not develop or apply their own coverage, payment, or billing policies." In other words, as they audit organization's records, they must identify improper payments or those claims that "likely contain" improper payments based on Medicare's rules. For example, one rule is that the RA can only review claims under three years old.

If an RA finds an improper payment, then a file is sent to a claims-processing contractor, who then adjusts the claim and attempts to recoup the payment. If the RA finds claims that are "likely" to be improper, they request the medical record from the provider, which is due within 45 days unless a provider files an extension.

One the RA receives the medical record, he or she assesses the record and the claim to see if it was overpaid, underpaid, or correctly reimbursed. Then, the RA sends a letter to the provider with the decision. At that point, the provider has the opportunity to file an appeal.

What to Watch For

According to CMS, there are seven fraud-prone states (Calif., Fla., Ill., La., Mich., N.Y., and Texas). Four states have high claims volumes for short inpatient hospital stays (Mo., N.C., Ohio, and Pa.), for a total of 11 states.

Regardless of which state you live in, if you are concerned that your practice might be audited, you should take several actions, according to Robert K. Zeman, M.D., FACR, chairman of the ACR Carrier Advisory Committee, and a member of the ACR Commission on Economics. You should familiarize yourself with CMS's RAC website,, where you can access a significant amount of information. You should also note that "all of the contractors are required to identify, have CMS approve, and post the types of claims and issues they are going to target," Zeman notes. Such information "may help radiology practices tighten up their own compliance programs, and be better prepared should an audit occur."

If your practice actually undergoes an RA audit, you may have a reason to be concerned even if you're confident in your claim history. Unfortunately, it is possible for the RA to make a mistake; in fact, CMS established the appeals process to allow providers to justify their claims.

Unfortunately, it is possible for the RA to make a mistake; in fact, CMS established the appeals process to allow providers to justify their claims.

One mistake could occur if an RA applies past policy to a claim submitted under current policy. For example, the RA could determine that reimbursement for an MRI claim in a patient with a pacemaker is invalid because past policy prohibited the use of MRI on such patients. The provider, however, could argue that the pacemaker was MRI-compatible, which is permitted in current policy. In addition, it's possible that the RA could misread the information altogether and refuse to reimburse for the MRI even though the scan occurred before the patient received a pacemaker.

To corroborate the timelines of services and their policies, providers can look to the ACR for help. The ACR Carrier Advisory Committee reviews all draft Medicare reimbursement policies and keeps them on file. It can provide radiologists with the policies necessary to prove that the claim matches up with the policy at the time of service.

For more information about ACR services related to policies, contact Anita McGlothlin at This email address is being protected from spambots. You need JavaScript enabled to view it.. To learn about the RA program, visit

RA Changes Effective June 2012

On or after June 2012 through May 2015, RAs will conduct prepayment review in addition to their current post payment review work. This is in addition and not in lieu of Medicare Administrative Contractor (MAC) prepayment reviews. MAC and RA contractors are encouraged by CMS to coordinate review areas so providers will not be audited by two different contractors for the same reason. The RA's focus will be on claims with high improper payment rates, beginning with reviews of short inpatient hospital stays (two days or less). In addition, RA reviews may be expanded to other provider/claim types. More details are scheduled to be released closer to the June implementation date.

Proposed Changes

On a broader auditor issue, CMS recently issued a proposed regulation that — if adopted — would give all auditors a tool to force physicians and providers to repay overpayments much sooner, while compelling them to "look back" in their billing records for up to ten years before they received an overpayment. The CMS proposed rule would implement the Affordable Care Act provision on a 60-day window to repay overpayments. A person who received an overpayment would have to report and return it to HHS, a state or relevant contractor with a written explanation of why the overpayment occurred. The action must occur by either: 1) the date that is 60 days after someone identifies the overpayment; or (2) the days that any corresponding cost report is due, if applicable — whichever comes later. Anyone who fails to make that report and repayment incurs an "obligation" under which the government could pursue False Claims Act liability. The government would assert that one has identified an overpayment if they actually know of it or act in reckless disregard or deliberate ignorance of it. Additionally, the Office of Inspector General can seek to exclude a radiologist from being eligible to participate in federal health-care programs. CMS emphasizes that physicians must follow the 60-day repayment obligation although a final rule has not yet taken effect.

By Brett Hansen

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