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In last months supplement we offered an overview of the Center for Medicare and Medicaid Services (CMS), Office of the Inspector General's (OIG) renewed focus on behavioral health care services in upcoming audits. As we pointed out, the Departments "Red" Book indicated that the OIG believed that billings for these services included what they termed "widespread problems across a variety of provider types and care settings" resulting in the potential for substantial "cost savings". When the OIG refers to "cost savings", they in fact mean they expect to re-coup millions of dollars of paid claims as well as penalties.
In order to reduce their exposure to risk and to have a stronger bargaining position should errors be found during an OIG audit, many acute health care facilities have implemented Voluntary Compliance Programs (VCP's) based on CMS' guidelines. However, it's important to note that in order to obtain the benefits of a VCP, it must be deemed effective by the OIG (http://www.ussc.gov/2004guid/8b2_1.htm).
Adding a new level of complexity to this already complicated subject, CMS announced in May 2005 the Recovery Audit Contracts (RAC) initiative. Under this three year pilot (initially only in California, Florida and New York), CMS will contract with third parties to conduct audits on both Medicare Secondary Payer (MSP) and non-MSP claims and activity. Compensation for RACs will be provided through retention of a percentage of the overpayment recoveries. At the end of the pilot period, CMS will …