The Recovery Audit Contractor (RAC) demonstration project from 2005 through 2008 resulted in almost $1 billion in overpayments being collected from providers. In 2009, talk of the anticipated dire impact of the nationwide rollout of RACs  was all the rage.

In March 2010, the American Hospital Association reported the net amount refunded to the CMS trust fund as a result of the demonstration period to be $693.6 million, of which 95 percent came from hospitals. Whether or not you are working at a hospital that has received letters from a RAC, you are not immune to the impact of the program.

This impact has spread auditing duties to other entities, and the size and scope of companies performing these audits is vast. The auditing now extends far beyond the government programs of MIC, MAC, and ZPIC, reaching deep into the commercial payer market.

Every payer who can afford to justify the auditing cost is performing checks on documentation, coding and medical necessity. Facilities must have a strategy for managing and resolving these time-consuming audits. There are measures you can institute to lighten your load. Besides assembling the correct team of experts to assist with audit issues, one recommendation is to choose a system carefully to help you manage the process and strategically analyze your audit results.

Tracking Audit Request

The impact to healthcare organizations responding to audit requests has run into the millions of dollars in actual recoupment and penalties being assessed.  During the demonstration project, it was reported that at least two full-time employees were required to manage a facility's RAC response process. With the audit expansion, however, it is estimated that facilities will be required to utilize even more resources.

Resources are required to track audit requests properly and to perform the following:

• Coordinate timely and accurate responses in order to avoid penalties and meet mandated deadlines;

• Document responses so they are accessible to persons who have a need to know and be involved in the process;

• Capture accurate data, creating a comprehensive record for deciding when and how to take the next step.

The required response and follow-up analysis pertaining to each request may demand that facilities hire or otherwise solicit experts to undertake the following:

• Provide appeals support or second opinions;

• Evaluate workflow for improvement potential; and/or

• Administer education and training to prevent audit issues in the future.

Expanded auditing has resulted in the need for increased communication within organizations. Whether the need area is expertise in managing the process, intimate knowledge of coding, reimbursement, medical necessity, appeals, or change management and communication, the cost of managing such audits increases quickly.  For these reasons and others, an organized and strategic defense is important, as is investing in a system to help you manage the process, communication and growing complexity of analysis.

Avoid Managing by Spreadsheet

Hospitals that have yet to choose a system for audit tracking should consider doing so now. Managing via spreadsheet application and manually tying to statements on the back end only will add to the resources needed to manage these time-consuming audit processes. This has been done and continues to be done, but it is an inefficient method that is fraught with opportunities for payers to win.

Some hospitals have chosen an in-house application solution without evaluating the market. While a smart choice at one time, if the system is starting to show signs of weakness when it comes to audit reporting, tracking, analysis or assistance producing a more strategic view of revenue strategies, it may be time to rethink your choice. Investing in a comprehensive system to help you manage the process is a good idea.

Advanced Systems

Many systems have been developed to facilitate management of specific audits, such as those performed by RACs. A recent review of more than 40 RAC systems indicates that time saving audit systems include such features as reminder alerts, document-capture capabilities for streamlined communications, and security features like audit trails, secure access and user role definition. While these basic features are critical for streamlining the process, systems offering them without additional strategic solutions for future analysis fall short of offering the best option.