RACs and Other Audits: 2011 in Review and Attractions Ahead

Perhaps the number one lesson learned regarding recovery audit contractors in the last year is that they are not going way and, in fact will be increasing. According to  the American Hospital Association's July 2011 RACTrac survey, complex denials are yielding a financial recoupment of $4,889, on average, and automated denials are yielding $405 per case. While these recoupments are relatively small numbers in terms of dollars, the high volume of cases being audited by RACs have led to considerable total recoupments. CMS' National Recovery Audit Program Newsletter (July 1, 2011 – September 30, 2011) states that RACs issued correction notices in the amount of $939.4 million.

RAC trends

All of the RACs are very active and have published over 1,000 approved review issues to date. In addition, the limits on the number of allowed record requests have gone up. For example, the highest Medicare patient volume providers can now have 500 cases reviewed in any 45 day period, up from 300 cases in prior years. In 2012, providers will be faced with more records to produce, more staff needed to manage audits, and a deeper level of technology support.  

Another trend experienced during 2011 was  a sharp increase in medical necessity reviews. It is anticipated that these will continue to increase in 2012 as the RACs will continue to post many more approved issues for medical necessity review.

There was one sign of relief in 2011 with regard to audits: the electronic submission of medical documentation (esMD) gateway program. This program hopes to reduce labor and production costs associated with medical record/documentation reproduction and transfer. The goal of esMD is to eliminate paper production and FedEx fees from the RAC process. The program is currently progressing, and has expanded to include Medicare’s Comprehensive Error Rate Testing (CERT) audits, Zone Program Integrity Contractor (ZPIC) audits, Payment Error Rate Measurement (PERM) audits and Medicare Administrative Contractors (MACs). HealthPort was the first health information handler to transfer records through the esMD program, and additional health information handlers and providers are coming on board daily.

New types of RAC audits
In addition to increasing volumes, the variety of audits is on the rise. The newest type of Medicare RAC audit is a "hybrid" or semi-automated review. These are software-driven and look for "aberrant billing practices" in claims data. Providers can easily identify these audits by looking for the word "informational" in the letters they receive from the RAC.

With semi-automated audits, providers have 45 days to decide if they wish to object to the finding and provide additional documentation supporting their case. The RAC has 60 days to make its determination.

Providers have expressed concern with semi-automated reviews because there is no limit on "informational" requests, and they do not get reimbursed for the cost of copying and mailing of the records. Like automated reviews, if you do not respond within the 45 day window, you are automatically denied. Three target areas that we have seen most likely to receive a semi-automated review are: missing modifiers, medically unlikely edits and chemotherapy dosing.

Beyond Medicare RACs
While focusing on Medicare, it is important that providers don't lose sight of the rest of the auditing bodies. These other auditing bodies will have a bigger impact in 2012, especially the start of the Medicaid RACs. Of all the other auditory bodies the ZPICs are the most onerous since they are often precursors to HHS' Office of Inspector General or other more serious criminal investigations. ZPIC requests should be taken very seriously. The best practice for all these audits is to treat them consistently, utilizing your centralized audit team and audit tracking software.

Looking ahead
Every hospital or health system's HIM director and audit team should be very familiar with the RAC program's 2012 scope of work. One major expectation for 2012 is that all the auditing bodies will expand their search for recoupment. The next expansion is expected to be into physician practices.

As provider billings come together, the review of physicians will become easier for automated discovery. Best practice suggests that your physician practice audits should roll into your central audit function. This will streamline workflow and provide some economics of scale.

The second major expectation is Medicaid RACs will be starting in 2012. These may be slow to ramp up, but by end of year they will probably be in full swing. The Medicaid RACs are required to give education sessions similar to what was provided by the Medicare RACs. You should be sure your institution is in contact with your state Medicaid agency to get the education and training.

As a coming attraction, we are expecting CMS to announce upcoming audits of Medicare parts C&D. A request for information was published in the Federal Register on Dec. 27, 2010 to gather comments on how to best implement the Part C&D RAC programs. The comment period closed on Feb. 25, 2011, but CMS has not yet released any plans for the Part C RAC program. The Part D Contract has been awarded but no start date has been established.

Another expectation for 2012 is the expanding role of technology in audit management. All the auditing bodies are using, or planning on using, technology to mine data. This data mining software is becoming much more sophisticated in identifying patterns, trends and individual cases for review. The provider side must use technology to diligently track and monitor all record requests, appeals, and denials. This will allow the provider to identify areas for improvement and help mitigate audit risk.

In summary, audit are ramping up and will continue for the foreseeable future. Best practices include centralizing the process and using technology to deal with the volume and workflow. You must monitor and measure and you must learn from the process. Most importantly is to implement the lessons learned or your risk will continue.

Ultimately your most important task is audit prevention through improved clinical documentation. Your CDI program can mitigate audit risk and should be underway to prepare for ICD-10 anyway. So use CDI as an audit tool and your exposure will lessen. As always in healthcare, prevention is preferred to intervention.

More Articles Featuring Lori Brocato:

5 Aspects of Medicare Part C Audits to Limit in Plan Negotiations
5 Conclusions on First Full Year of RAC Implementation

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