RACs Using “Semi-Automated” Claims Review

By: James Carroll for HIM Connection, April 12, 2011

Providers familiar with automated claims reviews and complex claims reviews by the recovery audit contractors (RAC) now face another method of overpayment identification: “Semi-automated” claims review.

Semi-automated review strays a bit from the automated and complex methods of overpayment identification recognized in the RAC statement of work, but is essentially a hybrid of the two primary techniques.

So with this new method, what exactly changes?

Not much, really. CMS breaks this new review process into two parts.  The first piece of the two-part review process involves automated review of claims data to identify billing aberrancies with a high index of suspicion of improper payment.

The RAC statement of work says an automated review occurs when a determination of error is made at the system level without human review of the medical record. “The first part of the new process is essentially the data mining the RACs have done all along using their proprietary systems, and is very similar to automated reviews,” says Kimberly Hoy, JD, CPC, director of Medicare and compliance at HCPro, Inc.

“The only exception being that identified claims only contain possible errors, rather than assumed errors, as in a standard automated review.”

The second part includes a notification letter sent to the provider explaining the potential billing error and giving the provider 45 days to submit documentation to support the original billing, according to CMS. This is the same timeframe given to providers to submit documentation for a claim that has been selected for complex review.

As a whole, “semi-automated” reviews may lead to additional burdens for providers, according to Elizabeth Lamkin, MHA, partner/CEO at Pace Healthcare Consulting, LLC, in Hilton Head Island, SC.

“We’ve known all along that automated reviews could turn into a complex review, and now they’ve added a formalized process,” she says. “This really emphasizes the risks of automated reviews because the RACs can scan unknown numbers of records for issues to be used for “mining vulnerabilities.”

She continued, “These could then become complex reviews and be used for identifying issues for extrapolation. This could be the tip of the iceberg as contractors become more sophisticated.”