RAC Audits Require Personnel, Processes and Practice Management

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Andrea Kloubec, Senior Director of Compliance at Park Nicollet Health System, Minneapolis

To ensure a smooth process, providers that proactively prepare for a recovery audit contractor (RAC) visit should apply a two-fold method by implementing a RAC taskforce and making sure accurate documentation and billing measures are in place, particularly with the help of health IT.

What you need to know

The job of RACs is to recover underpayment to or overpayment by Medicare. The auditors are paid the same contingency fees (9 to 12.5 percent, depending on their contract with CMS) for either type of erroneous payment. However, it is expected that overpayments will be more abundant and more easily identified. The auditors publish on their web sites the specific MS-DRGs (medical severity-diagnosis related groups) they are targeting. Hospitals can utilize this information to strategize their RAC preparation.

Hospitals should already have a RAC team in place, says Patricia Dear, president of eduTrax, a web-based educational portal. “There should be RAC-ready individuals in key areas of the hospital, with information on medical records, case management, patient financial services, reimbursement and revenue cycle. Hospitals should have worked through how they pull their records, how quickly they can scan them and if they can record them to a CD for review,” she says.

The entire team—from the executive suite to the employees collecting and processing information—should be educated about the process, because money is “made and lost anywhere along the continuum,” Dear says.
 

Inside the RAC

Recovery Audit Contractors Jurisdiction Region A: DCS Healthcare; Region B: CGI Federal; Region C: Connolly Healthcare; and Region D: Health Data Insights

CMS rolled out the RAC project as a demonstration in 2005 and it became a permanent program in 2008. The agency recently divided the U.S. into four regions and assigned an auditor to each section (see map on page 16):

  • Region A: DCS Healthcare
  • Region B: CGI Federal
  • Region C: Connolly Healthcare
  • Region D: Health Data Insights

At present, RACs can review DRG coding and validation, and will eventually be powered to check for medical necessity. There is a simple automated review and a complex review for which the auditor can request additional documentation. Complex reviews are becoming more common. In January, for example, CMS approved for Region D the complex review of 530 MS-DRGs (out of a total of 745) for validation and coding review.

CGI Federal has listed on its web site several complex validation reviews pertinent to cardiovascular medicine, including cardiac arrhythmia and conduction disorders, cardiac defibrillator implant with cardiac cath without acute MI/heart failure/shock, and cardiac valve and other major cardiothoracic procedures. All reviews are inpatient claims to check for overpayment.
 

Gearing up

Experts suggest that hospitals employ documentation specialists to assist physicians. Good Samaritan Hospital (GSH) in Vincennes, Ind., recently began a new clinical documentation system where two nurses, who have been trained as clinical documentation specialists, review all Medicare charts concurrently, working daily with physicians to get the correct documentation needed in the chart while the patient is still in the hospital.

“This should help us get the patient in the correct DRG that accurately reflects the severity of the visit,” says Wendy Mangin, director of medical records at the 232-bed Good Samaritan. “In the past, we were asking physician clarification questions post-discharge and by then, they had moved onto other patients, making it difficult for them to remember all the details for our questions.”

CGI Federal, the RAC auditor for Indiana, recently began its campaign in that state and GSH became a target. Having implemented the documentation system allowed the facility to produce the 10 requested charts for complex review. “They are purposely asking for a smaller number of charts so facilities in the state can get a chance to work out the processes before the volume of requests increases,” Mangin says.

She notes that a RAC audit isn’t that much different from other audits. “Health information management people are used to being audited by payors and quality improvement organizations,” Mangin says. “We just hope that we don’t have to spend a lot of time appealing cases.”

GSH uses a 3M encoder integrated with a McKesson EMR system, which prompts