Audit and Compliance



A new season of Medicare Recovery Audit Contractor (RA) audits began last month, bringing with it changes for both providers and RA contractors. As many Medicare providers across the country are resuming their audit management activities, let's take a look at some of the key changes to the RA audit process that took effect this year.

  • Claims Eligible for Review. As in prior audits, RAs will be reviewing Medicare fee-for-service, Part A and Part B, claims over a rolling three-year period based on date of payment NOT date of service. RAs are not permitted to review short-stay inpatient hospital claims; reviews for these types of claims will be limited to a six-month look-back period once the RAs are permitted to review them. The Quality Improvement Organization (QIO) are still authorized by the Centers for Medicare & Medicaid Services (CMS) to conduct sample reviews of these claims. If the QIO identifies a provider with high error rates in patient status, the provider may be referred to the appropriate RA for provider-specific audits.
  • New ADR Limits. New annual ADR limits went into effect Jan. 1, 2017, restricting the number of claims an RA can review for each provider per year. These limits are based on the number of claims paid the previous year, with the annual limit equaling one-half of one percent (0.5%) of the provider's total paid Medicare claims. RAs may not send ADR requests more frequently than 45 days. To determine the limit per 45-day cycle, the annual ADR limit is divided by eight. A provider's ADR limit is posted on their RA's provider portal.
  • ADR Limits applied to Claim Type. RAs are now required to diversify the claim types they are reviewing. To accomplish this, the annual ADR limit of 0.5% is applied to type of claim. The goal of this change is to ensure RAs are not focusing on reviewing only high-dollar inpatient claims.
  • Adjustable ADR Limits based on Performance. CMS has said that it will adjust ADR limits based on providers' denial rates. Those with better performance will carry lower ADR limits, while those with higher denial rates will carry higher ADR limits. While this was not a formal guideline in years' past, it did tend to occur as a result of the program's structure, with RAs focusing on providers that performed poorly rather than those that demonstrated higher compliance with Medicare billing rules.
  • Changes to Timelines for Complex Reviews. RAs now have half the time to complete complex reviews and notify providers, with timelines going from 60 days down to 30. If they do not meet this requirement, they will not be paid for the review. In addition, RAs must wait 30 days before sending the denied claim to Medicare Administrative Contractor (MAC), rather than sending it to MAC and the provider at the same time. This means providers will have the standard 30 days to request discussion with the RA but they no longer need to submit a Redetermination Request during that same timeframe. This change will prevent the extra step of withdrawing those Redetermination Requests based on the outcome of the discussion period. Now, MACs will be notified after a discussion period has ended.
  • New RA Accuracy Standards. CMS has announced that RAs are now held accountable to established accuracy standards. RAs must achieve an accuracy rate of 95 percent, leaving only a 5 percent margin for error. In addition, CMS has established that less than 10 percent of claims should be overturned at the first level of appeal. Consequences to the RA of failing to meet these requirements include decreased ADR limits and/or the elimination of certain reviews until these issues have been addressed and accuracy standards achieved.

While these changes are designed to promote increased objectivity in the RA audit process, the results remain to be seen. But one thing is certain: RA audits will continue to be fluid. For providers, the best practice approach will be a flexible audit management process that can seamlessly adapt to industry changes.