The Centers for Medicare & Medicaid Services does not expect its Medicare recovery audit contractors to conduct complex reviews for medical necessity of hospital services until 2010, agency officials recently told AHA. For this type of review, a RAC auditor retroactively reviews a Medicare claim to determine if services provided to a beneficiary were medically necessary as defined by Medicare guidelines in effect at the time of service. During CMS’ three-year RAC demonstration, 32% of all claims denials were for medical necessity. However, a CMS-sponsored study of medical necessity denials of inpatient rehabilitation facility claims performed by the California demonstration RAC found a 40% error rate. “This study validated concerns about the ability of RAC auditors to accurately judge the clinical decisions made by a patient’s treating physician – sometimes three of more years after the care was provided,” said Rochelle Archuleta, AHA senior associate director for policy. “These concerns persist with regard to the permanent RAC program, which is currently being rolled out by CMS and its four contract RACs.” Under the permanent program, the look back period is three years, but RACs may not review claims paid prior to Oct. 1, 2007.