RACs Poised to Audit IRFs: Reasonable, Necessary Care

If approved, reviews would impact RAC Regions 1 through 4 in all states.

In November 2017, the Centers for Medicare & Medicaid Services (CMS) announced that proposed Recovery Auditor (RAC) review topics would be posted. These topics, which have been proposed, but not yet approved, are available on the Medicare Provider Resources web page. This process is intended to give organizations a heads-up about what reviews are likely to be coming in the future. While complex medical review for Inpatient Rehabilitation Facilities (IRFs) was proposed at that time of the posting, it too was not approved.

Fast forward to Aug. 8, 2018, when CMS posted 10 more proposed topics, including a potential complex medical review for IRFs: 0A024-Inpatient Rehabilitation Facility (IRF) Stays: Meeting Requirements to be considered Reasonable and Necessary. So clearly, IRFs are back in the spotlight as it pertains to potential RAC reviews.

How Do RACs Choose Issues for Proposed Review?
Recovery Auditors propose issues based on the use of complex and proprietary algorithms to analyze claim data, which focus on the likelihood of error. Based on the error rates the industry has seen in other audits – often initiated using similar data mining – it’s no surprise that the RACs would propose a review of IRFs. And because the criteria in the Medicare Benefit Policy Manual includes specific documentation elements, it’s also not surprising that complex medical reviews are being proposed.

How Many Records Could be Reviewed?
There are additional documentation request (ADR) limits, calculated by CMS and provided to the RACs, based on the total number of paid Medicare claims from the prior year and adjusted based on the provider’s compliance. The annual ADR limit is one-half of one percent (0.5 percent) of the provider’s total claims.

ADR letters are sent on a 45-day cycle, with the cycle limit calculated by dividing the annual limit by eight. As previously noted, CMS will adjust a provider’s ADR limit based on a provider’s compliance, and providers with low denial rates will have ADR limits decreased while providers with high denial rates will have their limits increase.

So, What Now?
If approved, the reviews would impact RAC Regions 1-4 in all states, and will likely include a review of how well each IRF meets the January 2010 clarifications for reasonable and necessary care in an IRF – the same areas that have been consistently reviewed by Medicare Administrative Contractors (MACs) in probe-and-educate reviews, by Special Medical Review Contractors (SMRCs), and in the current Targeted Probe and Education (TPE) program.

What’s the Bottom Line?
Proposed topics are posted for 30 days. We’ll be watching the postings and let our readers know if this issue gets approved.

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