Updated on: June 22, 2012

Raking Providers Over A Financial Fire

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Original story posted on: June 23, 2009

mklasaBy: Margaret Klasa, Board Certified DC and APRN

 

In the coming weeks, many providers will begin to feel the effects of the Recovery Audit Contractors (RACs), a program that began as a demonstration project by the Centers for Medicare and Medicaid Services (CMS).

 

Based on that project, the broader program now is being rolled out to the majority of states by August 2009 or later. The RACs will be a permanent program by 2010 with four RAC contractors auditing all states and FFS Medicare providers.

 

By now, almost all Medicare providers already have heard of the RACs, and states that were part of the RAC demonstration project such as California, Florida and New York already have felt the financial implications of the program. Still, providers may not yet grasp what the RAC permanent program will mean for their financial bottom lines.

 

Data from the June 2008 report compiled by CMS, "Medicare Audit Contractor (RAC) Program: An Evaluation of the 3-year Demonstration Project" reveals that the  average overpayment amount per claim ranged from $3,917 to $12,157. This represents the results from three initial RACs and the average annual overpayment that ranged from $118,834 to $850,502 per provider. These are compelling numbers when the clock is ticking and providers have to decide where they must allocate resources to meet the new demands of the RAC program.

 

In the first rollout phase, RACs will be conducting automated reviews using their own proprietary software to review claims data already processed by CMS. As CMS beefs up its RAC contractors, providers will have to deal with more time- and resource-consuming complex reviews that require medical records.

 

This delay in the onset of complex reviews is good news for providers. The delay allows providers time to assess their RAC readiness by reviewing past CERT audits, OIG reports, denial patterns and correct current claims. It is also a good time for providers to assess their IT, HIM, financial and revenue cycle workflow processes in preparation for numerous medical record requests and subsequent Medicare appeals. Richard Grundling, vice president for the Chicago-based Healthcare Financial Management Association agreed, stating "you almost have to get to an IT solution to help, and as a CIO pursue any IT solution or systems that can help make the coding process more accurate."

 

CFOs, CIOs and HIM directors should investigate their existing technology potential within their existing Practice Management Systems (PMS), claims editing software and EHR systems by re-examining workflows from registration through claims submission to ensure that documentation, medical necessity and numerous other issues scrutinized  in the RAC demonstration program are addressed.

 

Goodbye to Spreadsheets

 

Investing in RAC tracking software will help hospitals that are most likely to be inundated with numerous medical record requests for the complex RAC reviews. No longer can a provider's internal audit team rely on spreadsheets to capture, track and update the vast amount of data required by the RAC program and allow easy accessibility to other members. RAC tracking software will save providers time and money by aggregating all RAC-related documents such as medical record requests, RAC determination letters and correspondences. The software should allow a provider to proof any records or correspondences requested by a RAC prior to them being sent out. It also should have document management capabilities to allow for the storage and retrieval of RAC-related data that is vital for filing denial appeals.

 

The tracking software also should allow a provider to navigate through the five levels of the Medicare appeals process in order to comply with specific time requirements for filing appeals. This appeals process is crucial to providers since according to data released by CMS in January 2009, providers that appealed RAC determinations had a 45.2 percent success rate in overturning denials.

 

IT vendors have the opportunity to enhance their products by providing business intelligence across all aspects of a Practice Management System and claims editing software. Vendors should incorporate automatic edits and alerts for documentation, medical necessity from NCDs and LCDs, and Medicare manuals as RAC contractors also will be using these very same sources of information in their proprietary software to review claims. IT vendors also must update their customers with the most current data files such as ICD, CPT, HCPCS, CCI, DRG and Medicare fee schedules.

 

Technology to the Forefront

 

While time and money are issues, technology should lead the way in solving the problems created by the RAC program. Before hiring additional staff, an organization would be wise to look at its existing IT and HIM infrastructures in order to fine-tune any areas that need to be addressed based on the RAC demonstration project findings.

 

The RACs' proprietary software will be utilizing the same information such as NCDs, LCDs and Medicare program manuals that is available to providers through CMS. The challenge for providers will be to make sure all this information is available to them in their current systems. This short delay in complex reviews allows providers to do just that. By proactively investing in RAC tracking software, providers can take the necessary steps to handle the rigorous RAC document requests and time-consuming appeal processes efficiently.

 

About the Author

 

mklasaDr. Klasa is the director of software development at EMC Captiva. In this role, she is responsible for the context business knowledge discovery unit for medical content as it relates to the daily development of data products and software for medical claims editing and coding, with an emphasis on clinical and regulatory guidelines for Medicare, Medicaid and commercial payers. Her responsibilities include overseeing the development of emerging products, healthcare solutions and policy and compliance programs.

 

In leading her team's engagement in EMC Captiva healthcare solutions, she is aided by more than 20 years of private-practice healthcare experience as a chiropractic physician and nurse practitioner in Illinois, and she oversees a team that includes RHIA and RHIT coding and billing specialists.

Contact the Author: klasamarge@comcast.net

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