Kathleen Tynan McKiernan

At a Glance

To prepare for a RAC audit, Yale-New Haven Hospital has:

  • Developed a RAC readiness team with a multilevel team structure and clearly delineated roles
  • Created an efficient workflow design
  • Implemented a software solution that's capable of providing both real-time and retrospective RAC tracking and tools to manage cases from initial denial through final appeal

Within four years, the Medicare Recovery Audit Contractor (RAC)
demonstration program collected from healthcare providers in six states more than $900 million that auditors determined Medicare had overpaid as a result of inaccurate billing. The program also returned nearly $38 million in underpayments, but the former figure is what has hospitals across the country bracing for the national rollout of the RAC program in 2010.

It is widely assumed that large and high-profile organizations will be hit hard, and Yale-New Haven Hospital, New Haven, Conn.-the largest hospital in Connecticut, with 944 beds-qualifies on both scores. Yale-New Haven is a level one trauma and tertiary care center in partnership with the Yale University School of Medicine. The hospital records 53,000 discharges and 530,000 outpatient visits annually, and has a payer mix that is 26 percent Medicare and 14 percent Medicaid.

Determined to meet all RAC response deadlines so that cases would not automatically be lost due to missed deadlines, Yale-New Haven prepared for a worst-case scenario of 200 complex reviews every 45 days-which could potentially mean up to 2,000 requests for records, including all five levels of appeals, in a year. The hospital began its RAC readiness project in late 2008 with a focus on developing a multilevel team structure with clearly delineated roles, an efficient workflow design, and a software solution capable of providing both real-time and retrospective RAC tracking technology and tools to manage each RAC case from initial denial through final appeal.

Creating the RAC Response Structure

As the RAC readiness project got under way, it quickly became apparent that a robust response process would require executive buy-in. The first step was to get the attention and support of members of the executive team to ensure the project would have the necessary resources for planning and implementation. Accordingly, RAC audits became a new agenda item for the executive team. A project steering committee was formed with members of the executive team and representatives from finance, compliance, care coordination, clinical documentation management, utilization review (UR), and health information management (HIM). The role of the two physicians on the steering committee-the UR medical director and the associate chief of staff-is to help develop RAC response strategies, based on the types of denials Yale-New Haven Hospital experiences, that define how the hospital should appeal, whether it does so, and if so, when.

In the meantime, the physicians have worked with the leaders of each service line (e.g., the emergency department [ED], cardiology, the hospitalist group) to help these leaders understand their critical roles in RAC readiness. These leaders are key to ensuring that Yale-New Haven's documentation is up to par, and that it has everything it needs to adequately defend a decision to hospitalize a patient.

In addition to the steering committee, two operational groups were formed: The Care Coordination/Access Group includes representatives from admissions, care coordination, UR, and other areas as needed (for example, representatives from the hospital's IT department, to ensure that the hospital's IT systems will capture the data needed to review cases); and the RAC Operational Group includes representatives from the hospital's care coordination, HIM, utilization management (UM), patient finance, access, and reimbursement departments. (The reimbursement department, in particular, was a key player in the initiative.)

Additionally, a manager from Yale-New Haven's HIM department was appointed RAC coordinator.

Identifying Problems and Opportunities

In line with RAC readiness recommendations from the Centers for Medicare & Medicaid Services, the hospital performed an internal assessment of its own vulnerabilities, guided by data from a number of sources. These data were acquired from the RAC demonstration project results, analysis of denials from commercial insurers, internal compliance programs, information on other hospitals' experiences, and the Program for Evaluation Payment Patterns Electronic Reports (PEPPER), which contain hospital-specific Medicare data for 13 MS-DRGs that often have payment errors because of under- or overcoding.

Not surprisingly, medical necessity was identified as the No. 1  problem area that led to RAC reviews, followed by problems with coding accuracy and outpatient billing. Harry Nicholls, Yale-New Haven's director of HIM, explains that, thanks to quarterly reports from the hospital's compliance department, his department was able to quickly get started working on improving the accuracy of medical necessity documentation, coding, and outpatient billing.

"We have an active clinical documentation management program, so we're always working with our physicians on documenting and coding skills in general," he says. "In the same way, we always actively audit the quality of our coding and we do inservices on new coding guidelines. But we're probably paying a bit more attention now to problem areas such as surgical debridement, to make sure we're not overcoding."

The RAC project has afforded the hospital opportunities to focus even more intently on certain areas such as documentation of medical necessity. When ED physicians admit patients, they sometimes fail to write down the necessary documentation. This is the biggest source of denials for the hospital, and it has been the most difficult problem for the hospital to tackle in terms of denials management. In preparation for RACs, Yale-New Haven works even more closely with ED physicians on articulating their concerns about each patient than ever before, because the medical judgment of these physicians is what justifies an admission through the ED.

The Search for a Software Solution

The search for software that would meet Yale-New Haven's requirements was made easier by the hospital's existing relationship with a vendor that has worked with the hospital to increase and manage patient volume over the past nine years without the need for additional FTEs. The hospital already has an interface between admitting and finance that captures all demographic and episode information. Using a product from the same vendor also ensures that information from any previous chart reviews is readily accessible as well. "We have all those historical data at our fingertips whenever a patient comes into the hospital," says Anna Cierpisz, the hospital's RAC coordinator.

The solution is a web-based application that provides reports, work lists, and alerts identifying current and past patient encounters at risk for an audit, based on diagnosis and procedure codes that RACs have been focusing on. The application also tracks the following fields for each level of appeal:

  • Appeal due date
  • Appeal sent date
  • Appeal received date
  • Response due date
  • Appeal response received date

In addition, the system captures pre- and post-appeal length of stay (LOS); dollars pending, upheld, and overturned; and expected and actual reimbursement. Perhaps most important, it enables all  members of the RAC team to see all the data at all points. The fact that the application is web-based offers many advantages over software programs that have to be loaded, maintained, and updated on hundreds of personal computers across the organization.

One of the benefits the software delivers is customized reporting. Nicholls expects that Yale-New Haven's RAC steering committee will receive monthly reports on the kinds of requests being received, the number of requests in different stages of appeal, and any trends and issues that emerge. In the operational areas, he says, "We'll be running weekly reports to ensure there's nothing in the queue that needs to be worked."

So far, training has consisted of a full-day session led by a vendor representative with key staff-including about 15 people in UR, HIM, finance, patient finance, and admitting-regarding how to use the system. Group education sessions were conducted first, based on the role the different departments will play. Then, the trainer worked with individuals to answer specific questions. Trainers will return to the hospital again for a refresher course.

Designing the RAC Workflow

RAC work processes have been designed to keep things moving smoothly and swiftly. Cierpisz explains that HIM will handle the "mail" process, including chart requests, denials, and appeals. "Everything will be scanned into the web application program so the whole team will be able to review the communication taking place," she says. "This will also allow us to easily reprint charts as needed for appeals.

"Because we have a large campus, with functions in different locations, we have also set up a P.O. box to get requests directly and quickly," she says. "We'll be using Federal Express to ensure timeliness and will set very aggressive timelines so that we won't have to worry about missing response deadlines."

To test the system, the hospital performed a dry run of one portion of the cycle, from receiving the request to the point of sending out the record. The initial test went smoothly.


Building from the Ground Up

Software may be the engine of RAC readiness, but front-end strategy and teamwork are its foundation. The ultimate goal, after all, is to get bills right the first time. With this in mind, Yale-New Haven has boosted the number of care coordinators in its ED to cover admissions 16 hours a day.

The key to RAC readiness is to review each case for medical necessity as patients arrive. Yale-New Haven has automated its utilization of level-of-care criteria, which has made it easier for the hospital to perform reviews and record them so they are available for all members of the team. This step has also made it possible for hospital leaders to monitor the reviews more closely.

In the same way, Yale-New Haven needed to give its hospitalists a better understanding of the different levels of care to avoid "condition code 44," a term Medicare uses when someone is admitted as an inpatient for what later is determined to be an observation level of care.

Tying in care coordination as part of the readiness package is one success factor in preparing for RACs. Another, says Nicholls, is building an effective team around the response to requests, which starts with making sure everyone understands what the hospital is trying to do-and why-and their roles in these initiatives.

"We've taken every opportunity to stress the importance and potential impact of RAC to gain across-the-board commitment to responding appropriately," Nicholls says. "For example, we've talked about it in departmental staff meetings and done special orientation with HIM."

As an organization, Nicholls explains, Yale-New Haven has always enjoyed success in having people work well together in teams. "But I think this project has brought together people who may not have interacted much in the past-people in access and information management, care management, and patient finance."

Thanks to a constant and consistent focus on effective communication, teamwork has generated something less tangible than the hospital's well-crafted RAC response process, but also just as necessary: trust. Trust is important because there are a number of different steps in the hospital's RAC response process, and no one department or person owns the entire process. "If we're not all on the same page, we will all go down together," Nicholls says.

"Although we're not sure what to expect from RACs, because we've never undergone anything like this before, we know that whatever happens, we're as ready as we can be," Nicholls says.

Kathleen Tynan McKiernan, RN, MSN, CPUM, is associate director of clinical effectiveness, Yale-New Haven Hospital, New Haven, Conn. (tynanke@ynhh.org).


Getting Ready: Recommendations

Steps that the Centers for Medicare & Medicaid Services suggests providers take to fully prepare for a RAC audit include the following:

  • Perform an internal assessment to ensure that claims generated comply with Medicare requirements; take corrective action where necessary.
  • Review RAC web sites and patterns of denied claims to identify problem areas.
  • Implement procedures to promptly respond to requests for medical records.
  • File appeals of audit determinations before the 120-day deadline.
  • Keep track of denied claims and corrections of previous errors.

View the Software Solution Checklist

Publication Date: Monday, March 01, 2010

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