August 15, 2011

Understanding and Managing the Posted RAC Issues

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amanda-berglund100As you are aware, the Centers for Medicare & Medicaid Services (CMS) has given the four regional Recovery Audit Contractors (RACs) the power to audit Medicare claims for quickly growing lists of issues across multiple provider types to recover what they consider to be improper payments. This article focuses on how you can access these issues – and more importantly, why you need to.

It is not CMS, but the RACs that are tasked with identifying areas of vulnerability for providers billing through Medicare. To explain further, the “issues” referenced above are any areas where there is a potential vulnerability that allows for improper payments. Each RAC must support any claim that an issue should be approved and added to its issues list through sample (or probe) audits of claims. Each RAC also independently must demonstrate that an issue should be added to its own website – this is why the number and focuses of issues vary across the RACs. However, although each RAC has its own issues list, you can be sure that individual RACs are monitoring issues approved for other RACs closely with the intent of exploring those issues for their own audits.

Once an issue is approved, it must be added to the issues list on each RAC’s website. While these lists should serve to help providers determine their internal “RAC risk,” the lists have gotten so long and so difficult to navigate that some providers are unable to digest them – so instead they decide to wait for an audit before figuring out where they may have problems.

It should go without saying that waiting for an audit before understanding your RAC’s posted issues is very shortsighted, and allows errors and potential problems to persist unchecked.

If the risk of individual cases being denied isn’t enough to encourage providers to review their RAC lists and identify vulnerabilities, the risk of extrapolation – through which an error in a sampling of cases can be extrapolated over the entire case load across a span of three years – should be. Consider, for example, that a RAC determines the existence of a $50 error in 25 percent of a 100-case sample. This $50 error for the 100 cases means payback of $1,250 ($50 times 25 percent times 100). But what if you have 25,000 such cases and the statistical method indicates a certainty rate of 85 percent?

Your extrapolated recoupment, in that case, could be $265,625!(1)

Unfortunately, keeping abreast of all RAC issues for your region is not as easy as going to your RAC’s issues website and pulling out the newly posted issues. Existing issues can be changed at any time without notification. Depending on your contractor, you may find that your RAC’s website search capability is missing or not very helpful, that there is limited or no sorting capability, or that you have to click on each individual issue for more detail. It will be necessary for the most part to scroll through long lists on a regular basis to identify new or modified issues.

Because many providers have found that RAC websites can be difficult to navigate, some consulting firms (including ours) have created websites that allow providers to access, sort, filter, print and download issues. This can be especially helpful for providers that don’t want to scroll through hundreds of issues that only apply to other providers in order to find those issues that impact their organizations. It also can help providers group issues by the department or individual responsible for reviewing claims, determining risk and/or mounting appeals.

Regardless of how you access the information, use the issues list as a starting point to assess your own organization’s systems and processes, and to mitigate the loss of revenue and risk of overpayments for future claims. Providers should assign a committee or an individual responsible for keeping up with their RACs’ issues lists, and those entities should monitor beyond just those issues that affect your specific provider type. Because RACs can look across an entire episode of care, providers need to know how their partners in care (i.e. medical staff, post-acute facilities, outpatient hospitals, etc.) are vulnerable. For example, if an acute-care case is denied for an inpatient stay due to failure to meet medical necessity, the physician’s claim, the post-acute facility, etc. also may be vulnerable.

Knowing the issues helps you identify and quantify your own risk, and there are several software tools available that can link your own claims data with existing issues to demonstrate quickly which cases are most at risk. Use this list to prepare cases for review and appeals, and to make changes to avoid the errors in the future.

About the Author

Amanda Berglund, MS, MBA, is a partner in PACE Healthcare Consulting. Prior to joining PHCC, Amanda was Associate Administrator and Chief Business Development Officer at North Fulton Regional Hospital near Atlanta, GA.She is a former Manager of Business Development for Tenet Healthcare Corporation. Amanda received a BS from Columbia University and an MS from Georgia Institute of Technology. She also has an MBA in entrepreneurial leadership from Nova Southeastern University.

Contact the Author

amanda.berglund@pacehcc.com

To comment on this article please go to editor@racmonitor.com

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(1)This example is an overly simplified one used to express the point of extrapolation. When extrapolating over a number of claims, appropriate statistical methods must be used.

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