What is RAC about?
A word of warning to those of you in the health care field: It is time to pay attention to a real threat to your revenues. Congress has given Recovery Audit Contractors – also known as RACs – broad powers to identify and collect over and under payments from health care providers of all types, including physicians, hospitals and even hospices. This initiative is not limited to fraud, but includes any violation, even innocent mistakes like signature oversights.
Using only 100 auditors in three states, the pilot RAC program collected more than $1 billion in improper payments to Medicare. Congress has now legislated a nationwide RAC program that involves every state and now includes Medicaid. These independent contractors are incentivized: Their pay is part of the dollars they collect, including possible fines. The reality for the medical community? The RAC audits are here, and they could cost you.
How much? Theoretically nothing, if you had no documentation or coding errors. However, some providers have had over $1 million in billings to be repaid.
Like any bureaucratic initiative, there are details that may be hidden from the practitioner. For example, if the RAC wolf knocks on your door, you must respond within 30 days or you may forfeit an appeal. The difficulty is you never know whether the wolf is a wisp … or a hurricane.
What kind of house are you building?
On April 28, the Centers for Medicare and Medicaid Services, or CMS, conducted a national conference call about RACs (for details, see www.cms.gov/rac/). The CMS reps said there are four things to do to prepare:
1. Perform your own internal audits.
2. Compute your “error rate” and monitor it (even if this means you submit billing amendments to pay Medicare or Medicaid).
3. Follow RAC Web sites to stay current with RAC-related issues.
4. Be prepared to respond to an RAC auditor’s requests (if you get asked for one, you may well expect more).
Many will accept the risk of having a “straw house” and not prepare. If you have experience with government reviewers and auditors, you know your risks are financial, as well as the time and anxiety typically affecting office staff, support staff, plus one’s CPAs and attorneys. Just being notified that your office is under review by the U.S. government will not make you sleep better.
So at least build a straw house to help manage an RAC audit. Conduct your own internal (and confidential) assessment of your documentation, coding and billing practices. Even better, consider engaging a qualified, experienced third party to conduct a confidential, internal audit and get a baseline and some idea of your exposure to costly disallowances if you are audited. Discuss with your attorney how to protect the findings of a third-party auditor by creating an attorney client privilege.
Why consider a “wood house”?
Our experience indicates that most providers are carrying an unrecognized and unfunded liability on their balance sheets. You can easily calculate your financial risk based on the percentage of Medicare patients you have, the practice error rate and the three-year “look back” that RAC audits can use to disallow previous reimbursement. The costs involved can be large and the implications serious.
Even if you use an internal professional, it is prudent to get another view since specific billing codes are regularly updated (and the number of codes is projected to expand tenfold in 2013, opening the door to an even bigger wolf) and involves a subjective process: doing a detailed review of a carefully selected sample of each physician’s patient files. Specifically, this is your chance to evaluate the appropriateness of coding and documentation for provided services. The scope of this level of error includes at least a complete review of selected medical records, the final billed claim form and the final charge ticket(s) on billed diagnostic, procedure and modifier codes. Use qualified, experienced professionals. Ideally, use certified coding specialists, including nurse auditors with RHIA and CPC credentials. This is not the place to pinch pennies.
But I want a brick house.
No, this section is not about that old rock ‘n’ roll song! It is about using the threat of the RAC wolf to do more than defend revenues. Consider this: You can create or revise your regulatory compliance process to be a reliable system that lets you sleep comfortably, knowing you are doing your best to prepare and that you may actually increase your revenues. When you don’t know whether you have a sound regulatory compliance system, you also don’t know whether you are leaving potential billings on the table!
A “brick house” integrates end-to-end assessment to help providers meet all federal recommendations for RAC preparedness while positioning a practice, organization or institution for optimizing its revenues.
Building a solid foundation will help you keep the RAC wolf at bay and may surprise you with increased revenues:
1. Review and assessment of the current compliance program in place
2. Case sample review to determine error rates and recommend corrective actions
3. Development of a prompt response system to comply with RAC requests
4. Access to unique options to insure risks associated with the RAC
Remember: Use third parties to bring an outsider’s view on what and how to optimize your regulatory compliance-related activities. Getting prepared for RAC audits can transform what could be a crisis into an opportunity.
Barry Tuchfeld, Ph.D., is a partner in Komedix, LLC, a San Antonio-based consulting group offering a full range of compliance services. Its Diagnostic Review Process ™ helps providers drive down their error rates, start to understand and decrease their liabilities to Medicare (and potentially other insurers) and prepare their staff for an RAC audit. For more information, visit www.komedix.net.
