This year healthcare providers were introduced to yet another Medicare program with an alphabet-soup acronym, the Recovery Audit Contractor program (RAC). By now, we all know the storyline:

• The RAC demonstration program estimated that $10.8 billion in Medicare payments do not comply with Medicare coverage, coding or billing rules.
  
  
• Hospitals were forced to pay money back, and the RAC program contractors received a chunk of the improper payments.
  
  
• RAC initiatives will have a continuing impact on healthcare payments for services provided to beneficiaries of federal health insurance programs.
  

The healthcare system's general reaction to the rollout of the RAC program has been similar to its reactions to the Outpatient Prospective Payments System (OPPS) in 2000 and MS-DRGs in 2007. We'd like to share our perspective on how the industry responded this year and give you our take on what may lie ahead.

First, though, let's flash back to 2000, when OPPS was implemented. Because of the corresponding significant change in reporting requirements, providers were urged to proactively assess the many systems and processes critical to the outpatient revenue cycle. Areas of focus included:

• Development of an OPPS Readiness Committee
  
  
• Charge Master Data Accuracy and Usage
  
  
• Registration and Data Capture
  
  
• Clinical Documentation and Coding
  
  
• Ancillary Services Utilization
  
  
• Information System Functions
  
  
• Financial Impact Techniques
  
  
• Staff Training and Education
  
  
• Purchase APC Grouper Software
  
  

Handwriting on the Wall

In order to survive under OPPS, organizations were told that they must define and comprehend their outpatient business, understand the financial implications of prospective payment, anticipate compliance exposure, improve outpatient data management and identify outpatient resource, quality and utilization issues.

Skip ahead to 2007. Because of another change in reporting requirements, providers were urged to proactively assess the many systems and processes critical to the inpatient revenue cycle. We were presented with the following "Strategies for Success with MS-DRGs:"

• Creating an MS-DRG readiness committee
  
  
• Identifying high-risk, high-volume, problem-prone DRGs
  
  
• Developing documentation templates
  
  
• Setting up a clinical documentation improvement program
  
  
• Delivering medical staff education
  
  
• Reviewing the physician query process
  
  
• Using data to identify opportunities for improvement
  
  
• Evaluating the effectiveness of improvement strategies
  
  
• Purchasing MS-DRG grouper software