RAC ‘Time Out’ a Chance to Review

Sept. 24, 2009

Now is a good time to ensure that the right technology is in place, before medical necessity reviews are required.

Earlier this year, hospitals and physicians in 17 states received pleasant news from the American Hospital Association (AHA) regarding the Centers for Medicare and Medicaid Service’s (CMS) permanent recovery audit contractor (RAC) program. According to the AHA, reviews that are the most difficult to manage and track – RAC complex reviews for medical necessity – will not begin until early 2010; with diagnosis-related group (DRG) and coding reviews late this year. RAC automatic reviews, which require fewer resources and time, began in late June for the first wave of permanent program states.

A common problem involves glitches with medical-necessity prescreening. This problem is commonly caused by payer rules and edits not being updated in hospital systems or other third-party systems.

Underprepared organizations now have additional time to finalize RAC programs and implement supporting technology for complex reviews. Provider organizations that already had programs in place have six more months to fine-tune systems and implement preventative measures to mitigate risk. Either way, the recent news gives everyone a time out.

Provider organizations should use this time to huddle together, analyze their positions and strengthen their defenses. Specifically for chief information officers (CIOs) and RAC teams, now is a good time to ensure that the right technology is in place.

Small to medium physician practices and hospitals with fewer than 50 beds may develop Microsoft Excel spreadsheets or ACCESS databases to track RAC. If an organization has multiple locations and/or a large number of record requests from the RAC, however, something more robust will be necessary.

RACs can request up to 200 records every 45 days for each national provider identifier (NPI). During the demonstration project, approximately 14 percent of all cases requested resulted in a lengthy appeal process. Organizations with multiple NPIs have the potential to be inundated with RAC request letters and appeals.

While CIOs do not need to know the nuances of clinical documentation, medical necessity or coding, understanding which data elements should be included in a RAC tracking system is important. The American Health Information Management Association recently published a list of data points that should be captured by a RAC tracking tool: internal log number; external tracking number (e.g., from the RAC); date of request; medical record number; account, encounter or visit number; discharge data and length of stay; original DRG or diagnosis; date record sent; and copying fees and invoicing.

Secondly, some type of “scan-and-store” software is needed to capture all correspondence from the RAC and incorporate hand-written notes and electronic documents created as a by-product of appeal processing. Ideally, the document-management technology will be integrated with the tracking tool mentioned above. In this way, the entire RAC team has a centralized repository for case information, medical records and RAC documents.

Beyond RAC-tracking software, CIOs can take this extra time to conduct a thorough technology assessment. Existing systems for registration, coding, billing and financial reporting should be reviewed.

A common problem involves glitches with medical-necessity prescreening. Procedures and diagnoses may appear to be approved by programs in use at registration, only to be denied at claims submission. This problem is commonly caused by payer rules and edits not being updated in hospital systems or other third-party systems.

There can also be disparity between the admission criteria programs being used and what CMS has published. CIOs should take the time to walk through each step of admission, charging, coding and claims preparation to be sure that all interfaces are working accurately and databases are updated.

  • Make sure inpatient and outpatient claims data is clean by ensuring claims scrubbers, editing software, charge-capture systems and charge masters are correct and up to date.
  • Check software tools used by coders, case management, clinical documentation improvement teams and compliance. Are they current and are alerts set for specific RAC-targeted diagnoses and procedures?
  • Audit registration systems, along with their associated interfaces to coding and billing applications, to ensure data is being captured, transmitted and shared between systems correctly. Also, are all checks and alerts functioning correctly?
  • Finally, double-check financial reporting tools and business-intelligence software for data compilation and reporting accuracy.

RAC will be expanding to all 50 states. Contractors will continue to find new reasons to conduct reviews and audits. In fact, there is a formal process in place for RACs to petition CMS and receive approval to expand audit parameters.

In addition to geographical expansion, provider organizations can assume that RACs – or something like them – will be adopted by other payers, as well. First in line is Medicaid’s revenue integrity program. Also put into place as part of the 2005 Deficit Reduction Act, 40 test provider audits in four states are included in the 2008 plan, with a demonstration to be conducted shortly in South Carolina. Facilities in Florida and Texas also are starting to receive requests for medical records from this program and Georgia is targeted next.

With complex reviews delayed for first-wave states, provider organizations have a window of opportunity to regroup and refine their strategies. Technology should be part of those strategies.

RACs are using sophisticated software programs to mine claims data and identify potential overpayments. Likewise, the RACS are deploying technology at a rapid rate and will be completely electronic by 2010. With so much technology being applied, providers need to evaluate existing systems and make sure RAC tracking tools are installed and ready.

Lori Brocato is the manager of revenue-cycle technology for HealthPort, Alpharetta, Ga.

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