Tag Archives: Notification Letter

RECOVERY AUDIT CONTRACTORS (RACs) MOVING TO SEMI-AUTOMATED REVIEWS

The Recovery Audit Contractors (RACs) have been moving towards big data analysis of claims from health care providers.   According to the CMS report “Recovery Auditing in Medicare and Medicaid for Fiscal year 2012“, more than 67% of all audits are done through “semi-automated” reviews.

Health Care Providers have been unsuccessful in getting judicial review of the complex algorithms used in these automated reviews.   For example, it is impossible to determine how fair is the targeting process.   When auditors are asked to provide this information, health care providers are told that this information is a “trade secret“, and in any case is not reviewable by the Administrative Law Judge (ALJ).

How successful are automated reviews?  The data shows that 91% of the claw-backs from health care providers were the result of so-called “complex reviews”, not dependent upon the semi-automatic review process.

In writing about semi-automated reviews, CMS states:

“The first part is the identification of a billing aberrancy through an automated review using claims data.  This aberrancy has a high index of suspicion to be an improper payment. The second part includes a Notification Letter that is sent to the provider explaining the potential billing error that was identified.  The letter also indicates that the provider has 45 days to submit documentation to support the original billing.”