October 7, 2009

Increased RAC Scrutiny Means Getting Back to Your Roots

By

cengle120xWe talk a lot about the increased scrutiny and risk that hospitals face today from third-party payers and Medicare and Medicaid contractors, including RACs, MACs, ZPICs, MICs and the Office of Inspector General.


Especially in the current economic climate, hospitals are ill prepared for inevitable recoupments amid their current shared circumstance of decreased reimbursement from these same payers.


What is not discussed much in the realm of preparing for RACs and other auditing bodies is a more traditional approach to denial management: performing a Root Cause Analysis on the issues that plagued hospitals during the demonstration project (and likely will be hot-button issues during the permanent project). Namely, these issues include several primary sources of improper payments - medical necessity, incorrect coding, and documentation integrity.


If your hospital has not already done a root cause analysis on these issues, you should take steps to mitigate some challenges by implementing one along with subsequent process improvements when denials start rolling in your door.


Root Cause Analysis


Risk managers in other industries long have used a structured process called root cause analysis, or RCA, to investigate the failures of a system and move past the "what happened" and "who did it" questions to the "why" answers with an eye on preventing problems from happening again. Healthcare professionals, especially concerning patient safety issues, have been using this methodology for some time, and it works equally well for analysis of denial management.


The Failure Mode Effects and Criticality Analysis (FMECA, or FMEA) is another methodology proactively used to look at the elements of a process in advance of a failure. This method determines how each step of a process might fail so it can be designed from the beginning not to fail. Both the RCA and FMEA not only are successful in circumstances in which there is actual or potential physical harm (like a patient safety issue), but also in situations in which there is actual or potential financial loss to an organization (like a RAC audit). The methods are particularly useful in the latter circumstances, in which there are so many moving parts with the potential to fail in a system of documentation, coding, and billing.


Root cause analysis is a four-step process designed to get to the origin of a problem by determining what happened and why it happened, with the ultimate goal of figuring out what to do to reduce the likelihood that it will happen again. RCA assumes that systems and events are interrelated and susceptible to chain reactions.


By tracing back these events, you can discover where a problem originated and how it grew into the symptom you're now facing.

  1. Collect your data. Since improper payment issues involve many moving parts, coordinate a team of experts from different departments in your revenue cycle that reviews what happened, when, how, and why.

  1. Determine the causes. You'll usually find three basic types of causes:

    1. Physical causes - Tangible, material items that failed in some way (a patient's chart is missing).
    2. Human causes - People did something wrong or did not do something that was needed. Human causes typically lead to physical causes (a patient's chart is missing because it was misfiled).
    3. Organizational causes - A system, process, or policy that people use to make decisions or do their work is faulty (no one identified that the chart was missing until three days before a RAC request was due).
    • A root cause analysis looks at all three of these types of causes, investigating patterns of negative effects, finding hidden flaws in a system and discovering specific actions that contributed to the problem. Many times an RCA reveals more than one root cause.

  1. Identify the root causes. After they have been identified, begin the root cause identification process that usually calls for the use of a decision diagram or "fishbone" diagram (see below). This diagram structures the process of unraveling an issue by asking questions about why a particular cause exists and the details behind each one. For every problem there probably will be a number of causes, and for each cause there probably will be a number of root causes.

    Your browser may not support display of this image.

  1. Formulate recommendations for corrective action. This last step performs a final analysis of your cause-and-effect process and identifies changes needed by recommending and implementing solutions to the problem. Some questions you will want to address are:
    • What can you do to prevent the problem from happening again?
    • How will the solution be implemented?
    • Who will be responsible for it?
    • What are the risks of implementing the solution?


Understanding why a problem that created an improper payment occurred is the key to developing effective recommendations for your RAC process.


Each question in your investigation should lead you to more questions, the answers to which will help you ascertain the root causes of the problem - so your corrective actions will be vital to reducing the likelihood of improper payments.


Once your corrective actions are in place you will notice that this proactive measure also will minimize original billing mistakes - plus accelerate and optimize proper payment of claims from the beginning - thereby reducing the changes that an audit will be conducted.


About the Author


Carla Engle, MBA, is a product manger for MediRegs, a Wolters Kluwer company. Her background includes more than 20 years in hospital and physician practice operations, particularly in reimbursement and billing functions. Prior to joining Wolters Kluwer recently, she was the vice president of compliance for a national revenue cycle solutions company and prior to that was in the Reimbursement Training Department with HCA. For several years she headed up the Part A Fraud Investigation Unit for a CMS Program Safeguard Contractor (PSC) where she was successful in the prosecution of several national cases. In her revenue cycle compliance capacity, she worked with a number of clients in California and Florida with Recovery Audit Contractors (RACs) in setting up processes and appeals.


Contact the Author

carla.engle@wolterskluwer.com

This email address is being protected from spambots. You need JavaScript enabled to view it.