Janice Redden
Kate Banks

One health system addressed challenges with the Recovery Audit Contractor (RAC) program by having a RAC audit response plan in place.

At a Glance

  • Healthcare providers should look both outside and inside their organizations to prepare for Recovery Audit Contractor (RAC) program challenges.
  • Organizations should have the right team in place to focus on their RAC audit response.
  • Preparation for RAC audits should include mining data to identify potential risk, automating claim filing, educating staff and physicians, and communicating to key stakeholders.  

The Centers for Medicare & Medicaid Services (CMS) RAC program rollout is expected to create increased scrutiny of Medicare reimbursement for hospital inpatient and outpatient services, skilled nursing facilities, physician practices, ambulance services, laboratory services, and durable medical equipment providers. The RAC program also is expected to result in a significant loss of revenue and additional operational costs for healthcare providers. Audited hospitals will be required to return all challenged Medicare payments immediately, and earn them back only after completing a complicated appeals process. Meanwhile, hospitals are already facing complex reviews in some regions as well as audits by federal, state, and even commercial payers. Complex reviews occur when RACs or other auditors have identified a likely improper payment and are requesting that the provider furnish the medical records attached to the claim to conduct a more in-depth review.

Now more than ever, it is critical for hospitals to expand upon and leverage the lessons learned by their organizations and others during the RAC pilot.

Healthcare providers should look both outside and inside their organizations to prepare for the RAC challenges that lie ahead. By looking outside, they can leverage the lessons learned by other organizations that have already put RAC systems and teams into place. Norton Healthcare, a not-for-profit organization serving the Louisville, Ky., region, has taken this approach-and has positioned itself to more efficiently respond to RAC audit requests. 

It Takes a Village-or in This Case, the Right Team

Healthcare providers that participated in the RAC pilots agree that assigning a team to focus on RAC audit responses is critical to ensuring that an organization will be able to respond in a timely manner with the proper documentation. Choosing the right team for the job is a key to success. Deciding to establish a RAC audit response team is the easy part. Determining who should be on that team and how the team will operate is more challenging. Team members should be focused and dedicated to the process. The team should include members of the revenue cycle department in addition to representatives from health information management (HIM), compliance, and case management.

RAC audit response teams should be developed using existing teams. For example, Norton Healthcare includes five hospitals, 11 immediate care centers, and more than 90 physician practice locations. Putting together a team in a large health system is a complex undertaking, so Norton decided to build its RAC audit response preparation around an existing process that had already achieved a high level of success. A billing and documentation committee that reviews all billing, coding, and compliance issues has been in place at Norton for several years. Members of that committee-which includes representation from the health system's revenue integrity, HIM, care management, compliance, patient access, reimbursement, and business office functions-were chosen to handle the RAC audits as well. The organization benefits from being able to leverage the skills and experience of the cross-functional team members for the RAC audit responses. The team meets semimonthly, with the vice president of compliance serving as committee chair. The health system's legal and patient access departments also are involved in the process.

Norton also has a billing and documentation team that works specifically with physician practices; this team also will be instrumental in the organization's RAC audit response. This multidisciplinary group meets every two months. Establishing clear, distinct communication channels for the RAC team is important. The team uses e-mail and conference calls to stay up-to-date on activities between meetings, and ensures that some type of communication occurs daily.

To further streamline the process and avoid confusion around responsibilities, Norton established a central post office (P.O.) box for RAC correspondence. Whether a RAC letter is addressed to one of Norton's hospitals or one of its physician practices, the letter is delivered to one P.O. box that is controlled by the revenue integrity department. That department is responsible for routing the letter to the appropriate hospital or practice group.

Preparation Is Paramount to Success

Other keys to developing a RAC audit response strategy revolve around preparation. In addition to identifying a RAC audit response team, Norton identified four key action steps to undertake early in the process.

Mine data continually to identify potential risks. By evaluating past claims, organizations can identify potentially vulnerable areas and make corrections before an audit begins. The RAC demonstration showed that correct coding is essential to ensuring that claims are not flagged for either "clearly containing errors" or being "likely to contain errors." Identifying areas of noncompliance and implementing a process improvement program to remedy identified deficiencies will help organizations minimize the financial impact of recoupment. Organizations also should analyze processes used in departments that contribute to Medicare compliance issues, such as patient access, case management, physician practice patterns, and finance.

Norton began conducting proactive chart audits in June 2008 and found some instances where the organization had inadvertently filed incorrect claims. Recently, Norton received correspondence from the Office of Inspector General (OIG) regarding billing errors that Norton already had identified as issues and had attempted to refile with National Government Services (NGS). Because the claims were refiled past the point of timely filing, NGS returned them to Norton. Norton contacted the OIG, which ultimately determined the claims were acceptable for processing. The lesson learned is that hospitals need to follow up to ensure that rebilled claims are processed correctly with the payer. This proactive approach has helped Norton as it faces NGS, Medicaid integrity contractors, and commercial payer audits for Current Procedural Terminology and Healthcare Common Procedure Coding System coding.

Incorporate automated components into the process. The RAC process can be cumbersome, and facilities in the pilot program found that manual processes were not sufficient for addressing RAC needs. Those that processed claims manually missed some deadlines and lost revenue. Establishing an automated RAC tracking solution is paramount to navigating the process. Facilities should use software that ensures that only valid claims are audited, provides a mechanism for escalating reminders as deadlines are approached or missed, develops tracking mechanisms, facilitates departmental communication, identifies systemic trends and weaknesses, manages appeals, and allows for capturing and monitoring data that can be shared with healthcare industry organizations, such as the American Hospital Association.

In September 2009, Norton implemented web-based software that streamlines and automates cumbersome RAC processes. The new tool audits historical claims and uses an interactive workflow and customized reporting to appeal RAC audit findings in a timely and efficient manner. The tool also links to a coding and reference research tool to quickly search for new rules and regulations and helps identify areas for improvement, such as compliance and reimbursement issues. With no limits on the number of automated requests (which do not require medical records) that can be sent to a provider, Norton anticipates this strategy as being important to its response. However, there will be a maximum number of medical records that can be requested per 45-day period per hospital campus.

Conduct education across the organization, and train key staff. Educating staff organizationwide about the RAC process and putting resources in place to empower staff to address needs is essential for a successful experience. Education of physicians is particularly important because practice patterns can significantly affect compliance and create the potential for the RAC to identify overpayments. The following are steps that organizations can take to educate physicians and staff:

  • Train a RAC team ahead of time to handle research and response
  • Consider tapping vendors or temporary staff to help with processes such as pulling files from off-site locations
  • Appoint internal RAC champions
  • Work with physician advisers and administrators on strategy and procedures

Norton's RAC committee members have conducted educational sessions for individual departments and committees, such as its medical executive committee, while carefully explaining what the RACs are looking for, the department's role in the process, and how to handle correspondence and medical record requests. Norton held one training session on how to use its new web-based RAC auditing tool immediately after the tool was implemented and plans to offer additional training opportunities once it begins to receive requests. The HIM department added two release-of-information specialists to work with RAC requests, and those staff members are in place to ensure that charts are readily available to go out the door in the event of a review. Norton's senior leadership team also has designated open positions to fill the role of coding auditors if the facility receives more audits than the existing staff can handle.

Communicate to all stakeholders. Healthcare providers, especially larger institutions, should put a communications infrastructure in place to ensure proper communication across the organization regarding RAC. Norton posts educational information and RAC updates in central mailrooms and other public areas that all staff members can easily access. For example, Norton created a poster to show all employees what the audit document looks like when mailed through the postal service.

The system also directs its communications to physicians. For example, Norton is making efforts to educate and communicate with its physicians and affiliated physician groups about the impact of the RAC audits and includes information on documentation and commercial audits. After all, success largely depends on these groups and their documentation. This education/communication effort has already begun with the orthopedic and neurosurgery departments and has further expanded to the OB-GYN practices affiliated with the organization.

When recently anticipating its first RAC communication, the team at Norton began checking the P.O. box regularly. Coincidentally, Norton staff learned that the RAC had mailed a letter to the hospital's main address, even though Norton's change of address form is posted on the RAC website. Norton never did find the RAC letter (which could not be e-mailed).

Another letter was sent to an unlikely recipient-one of Norton's human resource executives. Thinking the correspondence was related to a legal matter, that executive involved the organization's legal department before determining that the letter was RAC-related. When the letter, which was sent by the OIG rather than the RAC, was delivered to the revenue integrity department, the HIM department was ready to pull information and documentation.

Looking Ahead

For Norton, the term RAC now stands for Ready, Automated, and Continually improving. Norton is focused on testing and tweaking its improved RAC audit response processes and educating staff and physicians. The organization believes its processes for auditing are in good shape, but also realizes that practice is good before the ballgame, but until you get in the game, you don't really know what to expect. Organizations that have not yet put a RAC audit response plan in place can benefit from Norton's preparation to stay ahead of the audits.

Norton and others also can look to healthcare providers that have participated in the pilot program and have identified areas that were problematic during the pilot phase. Thanks to what Norton has learned, other organizations can use these lessons to proactively address issues related to RAC audit requests. Because the number and type of audits will continue to evolve and similar programs to address overpayment issues in other areas such as Medicaid will follow, lessons that are shared regarding how to respond to RAC audit requests will be vital for facilities preparing for the national RAC implementation. Those who heed the advice will have much to gain, both during the RAC process and beyond.

Janice Redden, CCS, CPC-H, is system director of revenue integrity, Norton Healthcare, Louisville, Ky., and a member of HFMA's Kentucky Chapter (janice.redden@nortonhealthcare.org). 

Kate Banks is president, customer revenue strategy, MedAssets, Alpharetta, Ga., and a member of HFMA's Georgia Chapter (kbanks@medassets.com).

Sidebar: About Norton Healthcare

Norton Healthcare, based in Louisville, Ky., includes five hospitals, 11 immediate care centers, and more than 90 physician practice locations. The not-for-profit organization serves residents throughout Kentucky and southern Indiana. The system has 10,900 employees, nearly 400 employed medical providers, and more than 2,300 total physicians on its medical staff.

Publication Date: Wednesday, September 01, 2010

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