Providers appealed 19.6 percent of Recovery Audit Contractor (RAC) overpayment determinations, vs. the 14 percent that CMS stated in its July report of the three-year demonstration program. The difference in appeals was reported by CMS in an update to its July report. The update includes appeal statistics through June 30, 2008, and the initial report only included appeal statistics through March 27, 2008. The update can be accessed here.

Additional statistical changes within the report update include:
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CMS made several announcements in October related to the development its permanent Recovery Audit Contractor (RAC) program.

On Oct. 9, CMS announced that it has hired Provider Resources, Inc., Erie, Pa., to work as the RAC Validation Contractor, which provides additional oversight to ensure that RACs are making accurate claim determinations in the permanent program. The Validation Contractor works with CMS and RACs to approve new issues that the RACs want to pursue for improper payments. In addition, the Validation Contractor performs accuracy reviews on a sample of randomly selected claims where the RACs have already collected overpayments.
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Medicare's no-pay policy for specific hospital-acquired conditions (HACs) has prompted one organization to quantify the legal liabilities that these conditions represent. The study reports that HACs represented 12.2 percent of total legal liability costs incurred among health care facilities in 2007. In addition, one in six legal claims against health care facilities were associated with HACs, injuries, pressure ulcers and foreign objects left in the body after surgery in 2007.

These findings were reported in Aon's "2008 Hospital Professional Liability and Physician Liability Benchmark Analysis."
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Laurie Johnson, a senior health information management consultant for Ingenix, was featured in an Oct. 1, 2008 article published online by Health Data Management, called Preparing for Medicare Audits.

The article focuses on using various strategies to prepare for potential audits from Recovery Audit Contractors (RACs). These strategies include conducing self-assessments, forming RAC committees, and data mining.
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CMS announced four new contractors that will administer specific states in its Recovery Audit Contractor (RAC) program. The four companies and the states that they will administer are:

• Diversified Collection Services, Inc., Livermore, Calif., initially working in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and New York.
• CGI Technologies and Solutions, Inc.. Fairfax, Va., initially working in Michigan, Indiana and Minnesota.
• Connolly Consulting Associates, Inc., Wilton, Conn., initially working in South Carolina, Florida, Colorado and New Mexico.
• HealthDataInsights, Inc., Las Vegas, Nev., initially working in Montana, Wyoming, North Dakota, South Dakota, Utah and Arizona.

Additional contractors, and states added to the program, will be announced in 2009, according to CMS. Details about the RAC program and the announcement can be accessed here.
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On Sept. 25, California Governor Arnold Schwarzenegger signed two measures designed to decrease hospital-acquired Methicillin-resistant Staphylococcus Aureus (MRSA) infections. CMS initially considered adding MRSA to its no-pay list for hospital acquired conditions (HACs), but ultimately decided to focus on eight other conditions. However, many within the industry expect CMS to add the condition to its no-pay list in the coming years.

The new California laws expand on CMS' HAC prevention efforts. Currently, the California laws do not contain provisions about denying reimbursement when patients acquire MRSA during a hospital stay.
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