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Region C Recovery Audit Contractor ("RAC") Announces Issues Available For RAC Review

Region C Recovery Audit Contractor ("RAC") Announces Issues Available For RAC Review

Health Care Law Note
(August 2009)

Connolly Healthcare, the Recovery Audit Contractor ("RAC") for Region C, has posted the first set of CMC-approved audit issues that will be the subject of RAC audits.  These audit issues affect outpatient hospitals and physicians in South Carolina. The issues are:

  • Blood transfusions (CPT codes 36430, 36440, and 36455) – Should be billed as one (1) per session, regardless of the number of units transfused.
  • "Untimed Codes" (CPT codes excluding modifiers KX and 59 where the procedure is not defined by a specific timeframe) – Should be billed as one (1) unit per date of service.
  • IV hydration therapy (CPT code 90760/96360) – Should be billed as one (1) per patient per date of service.
  • Bronchoscopy services (CPT codes 31625, 31628, and 31629) – Should be billed with a maximum of one (1) unit per patient per date of service.
  • "Once in a lifetime" procedures – Can only be billed once during a patient's lifetime.
  • Pediatric Codes – Codes billed for patients that exceed the age limitation defined by the CPT code.
  • Pegfilgrastim Injection, 6 mg (HCPC code J2505) – Should be billed as one (1) unit per patient per date of service.

The RAC audits will focus on paid dates from October 1, 2007 to the present.

It seems to us that the RAC program will, as expected by many observers, begin its focus on procedures of a type where an automated review of billing information can quickly identify overpayments.  Providers would be well advised to consider additional areas of their operations in which an electronic billing "filter" could be used to discover whether inappropriate billing took place, such as duplicate payments, violations of the "72 hour rule" for diagnostic testing, and short-stay inpatient admissions immediately prior to a SNF admission.

Although the current audits will take place only in South Carolina, providers in the other states and territories that make up Region C (Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, North Carolina, New Mexico, Oklahoma, Tennessee, Texas, Virginia, West Virginia, and the territories of Puerto Rico and the U.S. Virgin Islands) should monitor the audit process and remain alert to announcements regarding RAC audits in their jurisdictions.  As additional audit issues are approved, they will be posted on Connolly Healthcare's website at

On a positive note, at a recent "town hall" meeting in North Carolina, Christine Castelli with Connolly Healthcare announced that although Connolly's Statement of Work ("SOW") permits it to extrapolate, Connolly does not intend to do so at this time.  The extrapolation process outlined in the SOW permits a RAC to audit only a small sample of a provider's records and then extrapolate any overpayment finding to the provider's entire patient population.  RACs receive their full contingency fee even on extrapolated claims.

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