December 3, 2009

CMS Announces Changes to Medical Record Request Limits for RAC DRG Validation Audits

Responding to industry concerns over the prior method of calculating limits on medical record requests for RAC audits, CMS announced on December 1, 2009 that it has decided to modify the limits for FY 2010 for RAC DRG validation audits.  The new limits will be set annually, on a per tax ID, per campus basis. Previously, the limits were tied to NPI numbers which would have negatively impacted the many providers with multiple NPIs. 

The decision to change the way medical record limits are calculated may mean the agency is close to approving RAC requests for complex reviews, including DRG validation audits, which require medical records.  To date, CMS has only approved "automated" reviews which use software to find errors. 

Under the new policy, medical record request limits will be based on the provider's tax ID number, and the "campus" will be defined as a provider's physical locations that share the first three digits of a zip code.  For example, a provider with two locations in zip codes 12345 and 12356 would constitute a single campus and would have a single documentation limit; if the provider's two locations were in zip codes 12345 and 12456, each location would have its own documentation limit.

The limits for FY 2010 will be set at 1% of all claims submitted for the previous calendar year (2008) divided into 8 periods of 45 days.  The limit will apply to all claim types, including professional services.  For example, the documentation limit for a provider that billed 200,000 claims in 2008 would be 250 records per 45 days (200,000*.01)/8=250.

CMS explained that through March 2010, the agency will continue to set a limit of 200 requests per 45 days for all provider types. From April through September 2010, the cap will rise to 300 requests per 45 days for providers that bill in excess of 100,000 claims per tax ID.  In the above example, then, the provider's limit would be 200 every 45 days through March 2010; the limit would rise to 250 records every 45 days, beginning in April 2010.

The RACs may request permission to exceed the cap after the first six months of the fiscal year.  Approval will be considered on a case-by-case basis, and if approved, the provider will be notified of the expanded limits before receiving additional record requests.

CMS indicated that medical record request limits for other types of reviews would be posted at a later date.

If you have questions about the RAC program, you may contact Joan Lowes (jlowes@hallrender.com or 248-457-7857), Lori Wink (lwink@hallrender.com or 414-721-0456), Liz Elias (eelias@hallrender.com or 317-977-1468) or your regular Hall Render attorney.