A Relevant but Underreported Issue Health System Leaders Face When Dealing with RAC Audits

By Linda Benton
Original story posted on: July 1, 2014

As health system leaders continue to react to continuously updated regulations, many have been expressing their concern for the ongoing administrative burden that exists because of expanded Medicare oversight and its Recovery Auditor (RAC) audit program.

Their focus, of course, remains on compliance, and ensuring that providers respond to audit requests in a timely and accurate manner. However, until recently, as we know, the process had been driven largely by the manual administration of tasks – the collecting and compiling of physical records to ensure that claims get adjudicated and paid and that system leaders manage the process efficiently. These tasks represent an obvious challenge. While many other processes are moving toward technology advancement, the RAC process, though it is making some strides, still leaves much to be desired.

Still burdened with how to deal with overwhelming costs of printing, mailing, and tracking of documentation to support their claims to Medicare, one of the biggest and most relevant (but underreported) issues may be just how exactly health organizations should handle compliance with the RAC program (let alone how to address the stress that these audits cause). Many health information leaders and administrators routinely contemplate how best to handle the process: in-house, or via outsourcing to a third-party vendor? Of course, the latter approach can lead to delays during the response period, leading to timing issues and financial ramifications for not complying with audit requests. 

For responding health systems, the process can be cumbersome. Many hospitals still must print, sort, package, and mail documents to auditors to support original claims because they are not using digital solutions to avoid this practice. Since one patient record can fill a box or more, hospitals are left paying for the lion’s share of all materials, labor, and shipping involved, which can represent an enormous annual cost.

This, of course, is the primary reason for the development of Medicare’s Electronic Submission of Medical Documentation (esMD) program, which was launched by the Centers for Medicare & Medicaid Services (CMS) to provide a mechanism for health systems to electronically submit documentation in response to requests and audits. esMD was launched in 2011. Secure electronic exchange solutions are available for transmitting medical records to auditors in support of claims. Many health systems remain without this capability, though doing so provides clear benefits.

For example, Boca Raton Regional Hospital in Florida started performing electronic document transfers to Medicare in August 2012. The hospital was one of first in the nation to do so as part of Medicare’s esMD pilot program, the result of which has seen the hospital improving its revenue cycle management, streamlining the secure exchange of health information, responding quicker to Medicare audits, and, of course, eliminating paper and manual processes when adjudicating claims and responding to payers. Through the use of these solutions, Boca Raton Regional Hospital today ensures that protected health information required for claims and coordination of care is electronically transferable and available in a secure electronic format.

The hospital’s solution is also HIPAA-compliant. The hospital’s audit response is transmitted through the esMD CONNECT gateway, and transmitting records through esMD means timely filing of support documents, as providers receive an electronic confirmation of receipt from CMS and RAC contractors. For Boca Raton Regional Hospital, the Medicare audit process has been drastically improved because of the hospital now being able to submit documents electronically; as such, denials related to untimely submission of records have disappeared entirely. Medicare allows 45 days from the date of a record request for hospitals to respond, but the organization still sends documentation requests by paper. Typically, by the time the paper request gets to the proper department in the hospital, more than 10 days may have elapsed. This entire process and responding to audit requests requires strict time management, and hospitals often fail to return records to Medicare on time, meaning the hospital loses its right to appeal. By automating the process and securely transmitting medical documentation through the esMD Gateway, Boca Raton Regional Hospital has prevented the loss of at least $350,000 annually.

From a revenue cycle management standpoint, electronic attachment submission also has been a very good thing, ultimately helping the hospital save millions. Since auditors typically “go where the action is,” if they continue to recover money from certain hospitals, they’ll likely continue to audit them. As such, because of improved clinical processes and documentation, plus enhanced electronic attachment submission, Boca Raton Regional Hospital has seen a dramatic decrease in negative outcomes of audits since 2012. Additionally, engaging in this new strategy has created accountability for all parties involved in the process.

But as we know, today’s healthcare providers continue to drown in a sea of paper, even with ever-continuous upgrades and enhancements to practice management systems and the push to electronic health records. Integrating electronic request-and-response processes into the workflow, providing connectivity and interoperability with an electronic health record, can help health systems better control administrative and storage costs, comply with regulations, and respond to Medicare audits. Furthermore, this can reduce the time it takes for payors to process claims, as Boca Raton Regional Hospital can attest.

Additionally, these electronic request-and-response systems help improve security of records during the transfer process and eliminate the numerous boxes of files that providers currently may be required to ship to payors during the claims adjudication process. From a claims perspective, electronic data exchange automates and streamlines adjudication, helping hospitals save money each year related to the identifying, processing, storing, and tracking attachments.

For years, those working with Medicare have wanted more flexibility in the way they respond to audit requests. Payors and health systems continue to be very receptive to creating new efficiencies in submitting records and other documentation electronically. Now that Medicare is finally moving in this direction, health systems can begin doing the same.

And, though it seems like an obvious and simple problem to overcome, personally I feel that it’s also one of the most underreported. 

About the Author

Lindy Benton has worked in the healthcare information technology field for more than 20 years and is currently the CEO of EA Holdings, which includes MEA and NEA. Before joining MEA/NEA, Lindy served as divisional executive at The Sage Group, managing a $350 million division with 1,400 employees. Prior to working at Sage, Lindy worked at Cerner Corporation for 15 years. She held various leadership positions, wherein she achieved double-digit revenue growth while building high-performing teams that were consistently recognized year after year with outstanding achievement awards.

Contact the Author

Lindy.benton@mea-fast.com

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