RAC Audits Require Personnel, Processes and Practice Management
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 a series of questions to arrive at a specific code. Additionally, back-end scrubbers are employed to make sure codes such as gender-specific or single codes that require bundling are accurately coded.

“We feel comfortable with the way we’ve coded based on the documentation, but the RAC is in this to make money, so we’ll see what comes back this first round and if we need to appeal as a result of any denials,” says Mangin.

Spreadsheet to EMR

Even a documentation system as simple as an Excel spreadsheet might assist a hospital’s preparation. Before going live on Next-Gen’s EMR system in May 2009, Cardiovascular Associates, based in Kingsport, Tenn., used a spreadsheet to capture uncollected charges, according to Tammy Gott, CPC, peripheral vascular coordinator at the practice. The implementation resulted in the immediate recovery of $600,000 worth of charges that were identified, says Gott.

Now within the EMR, Cardiovascular Associates’ physicians choose the level of service for office visits and then the charger pulls the CPT codes over when they are billing from the charge ticket. “We code from the report, so if it’s not dictated, we don’t bill it,” says Gott.

It was during the RAC demonstration years that Park Nicollet Health Services in the Minneapolis area began employing a care integration team with utilization and case management review to make sure a patient was assigned correctly to inpatient or observation stays, says Andrea Kloubec, senior director of compliance at Park Nicollet.

The 426-bed Methodist Hospital, part of Park Nicollet’s integrated care system, began using InterQual’s care management program to appropriately assign patients. From a coding perspective, Park Nicollet is currently transitioning to an All Patient Refined Diagnostic Related Group (APR-DRG), which incorporates the severity of illness subclasses into the AP-DRGs. Unanticipated outcomes can be tracked and documentation lapses corrected. “From a medical necessity standpoint, this perspective takes coding even further because it incorporates it with quality initiatives and operational improvements,” says Kloubec.

Being proactive is the best approach to staving off disaster in the auditing process. Facilities and practices must use their resources wisely, interweaving the human, procedural and electronic components. In the end, all the prepatory work should lead to better patient care, less money falling through coding cracks and a seamless RAC visit.