Dealing with the RAC: Paying it Right the First Time By Day Egusquiza President AR Systems, Inc. Getting it Right The CMS Recovery Audit Contractor (RAC) program was developed to bring accuracy and fairness to the Medicare Fee for Service program. This means not just finding overpayments, but making sure providers are not underpaid. Paying it right is what it's all about. By identifying strategies for preventing improper payments upfront, your organization can avoid time-consuming data gathering and costly appeal processes. Updates to the RAC Program with Nationwide Expansion Now that the three-year RAC demonstration program is complete, it is being expanded nationwide. Based on the results of the demonstration program and feedback from participants, CMS has made updates to program policies and procedures to minimize the provider compliance burden while ensuring greater accuracy and maximum transparency. Changes include:       Reduction of the claim look-back period to a maximum          of three years.       Restriction that RACs not review paid claims prior to          October 1, 2007.       Establishing RAC medical record request limits based on          provider type within the 45-day period.       If more than 45 days are required to reply to a request          for records, you can ask the RAC for an extension. You          will have to request an extension to get one.       Requirement for RACs to accept imaged medical records          on CD or DVD.       Requirement for RACs to have appropriate licensed          professions, including a physician medical director,          certified medical coders, and other specialists required to          perform focused audits.       Provision of password-protected Web sites for providers          to more easily track claims status by January 2010.       Requirement for RACs to seek approval from CMS to          review new claim areas. CMS reviews the explanation          of the policies violated and the language they will use          in communicating with providers.       Evaluation of the accuracy and performance of each          RAC by an outside contractor, with an accuracy score          released annually. Some providers worry that RACs may erroneously deny claims to boost their own company's revenues. To discourage this practice, a loss at any level of appeal will result in RACs forfeiting their contingency fees for those claims. True Success — Proactive Improvements to Prevent Overpayments While the changes outlined above will ease some of the provider burden, true success will come when providers create systems and processes that find and eliminate improper payments before the arrival of an audit letter. One way to proactively prevent improper payments is to determine the cause of those that are occurring — both among providers in general and at your institution. References to guide providers:       The RAC demonstration program results found at          cms.hhs.gov/rac provides valuable information about          where improper payments have been found in the past.       An annual report documenting problem areas, including          improper payments, is issued by the Office of Inspector          General.       Most providers are familiar with the Comprehensive Error          Rate Testing (CERT) program and its report, which can be          found at www.cms.hhs.gov/cert. Your institution:       Conduct an internal audit or assessment of your claims by          sampling and searching for the same kinds of mistakes          being reported nationally.       Examine the denials received from your Medicare          contractor as well as the RAC.       Identify corrective actions that need to take place to be          in compliance. A review of the data can bring to light denial patterns. For example, are particular services more prone to denial? Does your organization consistently produce coding and documentation that support Medicare policies? Some of the most common areas where errors can occur include: For inpatients:       Three-day qualifying hospital stay prior to skilled nursing          facility (SNF) referral.       One-day stays where a lower level of service was          documented — OBS or Outpatient.       Validation of DRG coding. For outpatients:       Abnormally high ER bell curve — resources and intensity          of services do not warrant the evaluation and          management (E&M) level.       Inappropriate use of modifier 59 to identify          procedures/services not normally reported together.       Hospital-owned, physician-directed practices where the          hospital is liable for the appropriateness of the physician's          documentation to support billable services for E&M.       Drug administration start and stop times.       Medical necessity of admission status and billable hours          for observation services. Appealing Audit Results When you do become involved in an audit, medical record requests should be channeled into a specific, well-designed process that enables you to meet appeal deadlines. A facility should conduct a validation review upon receipt of the request for records so that known vulnerabilities can be identified early and corrective action can be taken immediately. The key to success is spending at least as much money and energy on correcting and preventing as you do appealing. Discuss any questions with the RAC: RACs are open to discussing their findings with you. If you receive a review results letter or demand letter for overpayment and have questions or concerns about the case, request an explanation or more information within the 15-day rebuttal period. That's particularly important if you believe a piece of information or data is missing from the record. If you don't understand the reasons for denial, initiate a conversation with the RAC. Use the normal appeals process: If the problem can't be resolved with the RAC, providers are protected by an appeals process. The first level of appeal goes to your Medicare Administrative Contractor (MAC) or Fiscal Intermediary (FI) and then follows the same route as any other Medicare contractors. Paying it Right is Good for Everyone This program has clearly generated a great deal of anxiety among providers. While the RACs have recovered around $990 million in Medicare overpayments between 2005 and 2008, they have also uncovered nearly $38 million in provider underpayments. Examples of these underpayments discovered by RACs include identifying a higher DRG coding level than submitted in the original claim and applying an incorrect discharge disposition: transfer vs. home. Because the program has motivated providers to avoid improper payments, the result is implementation of programs and process changes to improve claims tracking and submission. In some cases, providers are identifying additional opportunities for reimbursement. Ensuring proper payment for delivery of care services will be good for everyone — providers, payors and the American taxpayer. Day Egusquiza is a nationally recognized speaker on continuous quality improvement (CQI), benchmarking, redesigning, reimbursement systems and implementing an operational focus of compliance — both in hospitals and practices. She has been on the AAHAM National Advisory Council, HFMA National Advisory Council, HFMA Faculty, CCH Reimbursement Advisory board, and is a past President of the Idaho HFMA Chapter and recently received the Lifetime Achievement Award. Her work includes providing insight and guidance as a compliance, HIPAA and APC educator to department heads as well as business operation's staff.		AHA RAC Educational Series AHIMA: Understanding RAC Audit Trends Spartanburg complies with a RAC audit — the increased focus on clinical documentation and coding turns up bottom-line results. Adventist shares the secret of its RAC success — from teamwork to technology, plus good communication with the auditor. Gwinnett Health System incorporates lessons learned from RAC demonstration projects into preparing for its own Medicare RAC audit. Providers should take a phased approach to their RAC audits, focusing efforts on pre-audit, audit and ongoing review phases. 5995 Windward Parkway Alpharetta, GA 30005
On October 6, 2008, the Centers for Medicare & Medicaid Services (CMS) announced four Recovery Audit Contractors (RAC). Each of the RACs is responsible for identifying overpayment and underpayments in approximately one-quarter of the country. The new RAC jurisdictions match the Durable Medical Equipment Medicare Administrative Contractor (DME MAC) jurisdictions. The new RACs are:       Diversified Collection Services, Inc., of Livermore, Calif., in          Region A, initially working in Maine, New Hampshire, Vermont,          Massachusetts, Rhode Island and New York.       CGI Technologies and Solutions, Inc., of Fairfax, Va., in          Region B, initially working in Michigan, Indiana and Minnesota.       Connolly Consulting Associates, Inc. of Wilton, Conn., in Region          C, initially working in South Carolina, Florida, Colorado and          New Mexico.       HealthDataInsights, Inc., of Las Vegas, Nev. in Region D,          initially working in Montana, Wyoming, North Dakota, South          Dakota, Utah and Arizona. However, implementation of the expanded program was put on hold in November 2008 because of a challenge to the contract award process by a company that acted as a RAC during the demonstration project. It is expected the expanded program will resume in February 2009.