Pay for performance: It's not just for doctors anymore

It's a different interpretation of pay for performance, but the concept does apply to Medicare's Recovery Audit Contractors (RAC) program. Physicians in California and other states involved in the demonstration program may already understand the ramifications of this effort to recover improper Medicare payments. Now that the permanent program for RACs is gearing up across the country, it's important for all physicians to understand how it works.

The RAC program is different from Medicare safeguard audits like Comprehensive Error Rate Testing (CERT) that focus on identifying error rates for the Medicare payment contractors or postpayment review audits performed by individual carriers. RACs contract with the Centers for Medicare & Medicaid Services to perform post-payment reviews of Medicare claims to find overpayments and underpayments in return for a percentage (from 9 percent to 12.5 percent) of the amounts recovered. Put simply, they eat only what they kill. According to an evaluation of the three-year demonstration program, RACs returned $693.6 million to the Medicare trust funds, after subtracting the dollars in refunded underpayments, overpayments overturned on appeal, and operating costs for the program.

The RAC has two methods of uncovering improper payments - using computer software to analyze claims and auditing medical records. Hospital claims will likely continue to be a focus of their efforts, as was the case in the RAC demonstration program. However, hospitals have mobilized to defend themselves against RAC recoveries. At this time, physicians should not be overly concerned about being targeted but must not expect to be exempt from the program.

You should be aware of your rights in relation to records requests and refunds and how you might avoid some problems. If your practice does not have policies and processes in place to be sure that records sent in response to a payer/auditor request are appropriately screened for accurate dates of service and completeness and returned within the required time frame, I hope you'll schedule a few minutes to discuss the importance of this and establish a standard for your practice. It could save you money and headaches.

The AAFP has joined others in asking CMS to make changes to the program to lessen the burden and the risk to physicians. The AAFP has also put together an online guide to answer questions about the RACs and provide some tips that may help lessen the burden if an RAC does contact you.

It's a shame that honest physicians need to concern themselves with programs like this one, but here's hoping that the contractors do a good job of finding and stopping those few who create most of the concerns about fraud and abuse. They are out there, and now there are bounty hunters looking for them.

Have you had any experience with an RAC? Has the RAC contractor for your area provided any education to physicians? If you have tips that may help your fellow physicians, I hope you will share them.