Understanding Updated RAC ADRs

New changes impact the ADR limits for RACs.

The Centers for Medicare & Medicaid Services (CMS) has modified the additional documentation request (“ADR”) limits for the Medicare Fee-for-Service  Recovery Audit Contractor (RAC) program for suppliers. Yet, one of our listeners informed me that CMS has found a “work around” from the RAC ADR limits. She said, “There is the nationwide Supplemental Medical Review Contractor (SMRC) audits and now nationwide Quality Improvement Organizations (QIO) contract audits.

These contracts came about after the Congressional limits on number of audits by the RAC. According to Ronald Hirsch, MD, SMRC and QIO are not paid contingency fee. So, they are “different” audits. SMRCs and QIOs follow different rules than RACs, so of course the SMRCs and QIOs have distinct ADR limits.

This is similar to the lookback periods. The lookback period varies depending on the acronym: RAC, MAC, or UPIC. The RAC lookback period is three years. But because RACs are paid by contingency instead of a contracted rate, there is a limit placed on the RACs authority because they are already incentivized the find problems, plus RACs are allowed to extrapolate.

The Updated RAC ADR Limits

All that changed in April 2022. These limits will be set by CMS on a regular basis to establish the maximum number of medical records that may be requested by a RAC, per 45-day period.

Each limit will be based on a given supplier’s volume of Medicare claims paid within a previous 12-month period, in a particular Healthcare Common Procedure Coding System (HCPCS) policy group. The policy groups are available on the pricing, coding analysis, and coding, website.

Limits will be based on the supplier’s Tax Identification Number. Limits will be set at 10 percent of all paid claims, by policy group, paid within a previous 12-month period, divided into eight periods (45 days). Although a RAC may go more than 45 days between record requests, in no case shall a RAC make requests more frequently than every 45 days.

Limits are based on paid claims, irrespective of individual lines, although credit/replacement pairs shall be considered a single claim.

For example:

• Supplier A had the following:

1,253 claims paid with HCPCS codes in the “surgical dressings” policy group, within a previous 12-month period. The supplier’s ADR limit would be (1,253 * 0.1) / 8 = 15.6625, or 16 ADRs, per 45 days, for claims with HCPCS codes in the “surgical dressings” policy group.

• Supplier B had the following:

955 claims paid with HCPCS codes in the “glucose monitor” policy group, within a previous 12-month period. The supplier’s ADR limit would be (955 * 0.1) / 8 = 11.9375 or 12 ADRs, per 45 days, for claims with HCPCS codes in the “glucose monitor” policy group.

EDITOR’S NOTE:
In subsequent articles, Knicole Emanuel will report on limits for the following:

• The SMRC ADR limits
• The QIO ADR limits

Programming note: Listen to healthcare attorney Knicole Emanuel’s live RAC Reports every Monday on Monitor Mondays, 10 Eastern.