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DME Providers Get Repose in RAC Audits

The Centers for Medicare & Medicaid Services (CMS) announced that they have modified the additional documentation request (ADR) limits for the Medicare Fee-for-Service Recovery Audit Contractor (RAC) program for suppliers. ADRs are the about of documents that a RAC auditor can demand from you. This is a win for DME providers.

Currently, the RAC’s methodology is based on a total claim number by NPI without consideration for the number of claims in a particular product category. This means that suppliers can receive large volumes of RAC audits for a product category in which they do minimal business.

These new 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. These changes will be effective beginning April 1, 2022

Each limit will be based on a given supplier’s volume of Medicare claims paid within a previous 12-month period, in a particular HCPCS policy group (The policy groups are available on the PDAC website). Limits will be based on the supplier’s Tax Identification Number (TIN). Limits will be set at 10% of all paid claims, by policy group, paid within a previous 12-month period, divided into eight periods (45 days). If you get more than the allowed ADRs, call them out. These limits are created to lessen the burden on providers.

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 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 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.

CMS reserves the right to give a RAC permission to exceed these ADR limits. But that would be in instances of potential fraud.

New Revisions to the Additional Documentation Request (ADR) Process

The ADR rule went into effect Jan. 1, 2019. Original blog post published March 6, 2019, on RACMonitor.

The Centers for Medicare & Medicaid Services (CMS) has updated its criteria for additional document requests (ADRs). If your ADR “cycle” is less than 1, CMS will round it up to 1.

What is an ADR cycle?

When a claim is selected for medical review, an ADR is generated requesting medical documentation be submitted to ensure payment is appropriate. Documentation must be received by CGS (A Celerian Group Company)  within 45 calendar days for review and payment determination. Any selected and submitted claim can create an ADR. In other words, a provider is asked to prove that the service was rendered and that the billing was compliant.

It is imperative to understand that you, as the provider, check the Fiscal Intermediary Standard System (FISS) status/location S B6001. Providers are encouraged to use FISS Option 12 (Claim Inquiry) to check for ADRs at least once per week. You will not receive any other form of notification for an ADR.

To make matters even more confusing, there are two different types of ADRs: medical review (reason code 39700) and non-medical review (reason code 39701).

An ADR may be sent by CGS, Zone Program Integrity Contractors (ZPICs), Recovery Audit Contractors (RACs), Supplemental Medical Review Contractors (SMRCs), the Comprehensive Error Rate Testing (CERT) contractor, etc. When a claim is selected for review or when additional documentation is needed to complete the claim, an ADR letter is generated requesting that documentation and/or medical records be submitted.

The ADR process is essentially a type of prepayment review.

A baseline annual ADR limit is established for each provider based on the number of Medicare claims paid in the previous 12-month period that are associated with the provider’s six-digit CMS Certification Number (CCN) and the provider’s National Provider Identifier (NPI) number. Using the baseline annual ADR limit, an ADR cycle limit is also established.

After three 45-day ADR cycles, CMS will calculate (or recalculate) a provider’s denial rate, which will then be used to identify a provider’s corresponding “adjusted” ADR limit. Auditors may choose to either conduct reviews of a provider based on their adjusted ADR limit (with a shorter lookback period) or their baseline annual ADR limit (with a longer lookback period).

The baseline, annual ADR limit is one-half of one percent of the provider’s total number of paid Medicare service types for which the provider had reimbursed Medicare claims.

Effective Jan. 1, 2019, providers whose ADR cycle limit is less than 1, even though their annual ADR limit is greater than 1, will have their ADR cycle limit round up to 1 additional documentation request per 45 days, until their annual ADR limit has been reached.

For example, say Provider ABC billed and was paid for 400 Medicare claims in a previous 12-month period. The provider’s baseline annual ADR limit would be 400 multiplied by 0.005, which is two. The ADR cycle limit would be 2/8, which is less than one. Therefore, Provider ABC’s ADR cycle limit will be set at one additional documentation request per 45 days, until their annual ADR limit, which in this example is two, has been reached. In other words, Provider ABC can receive one additional documentation request for two of the eight ADR cycles, per year.

ADR letters are sent on a 45-day cycle. The baseline annual ADR limit is divided by eight to establish the ADR cycle limit, which is the maximum number of claims that can be included in a single 45-day period. Although auditors may go more than 45 days between record requests, in no case shall they make requests more frequently than every 45 days.

And that is the update on ADRs. Remember, the rule changed Jan. 1, 2019.