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The Medicare Recovery Audit Contractor Audits became official nationwide in 2010 due to the results that were achieved by the Centers for Medicare and Medicaid Services (CMS) when they performed a three year demonstration in 2005 in the states of Florida, California and New York.
The objective of the three year demonstration was to see if RACs would be successful at detecting improperly paid claims and then collect any overpayments and return them to the Medicare Trust Fund. In addition, RACs were also responsible for identifying under payments in addition to implementing actions to prevent improper payments.
During the three year demonstration, RACs were successful at recovering $1.03 billion in improperly paid claims. Due to the success of the three year demonstration, Congress mandated that a nationwide effort be implemented by 2010.
During the three year demonstration RACs focused heavily on medical necessity not being properly documented in physician documentation and the documentation not being compliant with CMS standards.
Now that the Medicare RAC Audits have become a nationwide effort, the need for audits by independent professionals has become a necessity for all healthcare organizations. Having such an audit performed by a third party auditor can identify areas that RACs look for in terms of improper coding, incorrect documentation and lack of documentation supporting medical necessity.
Successfully surviving a Medicare RAC audit or any insurance audit for that matter requires you to perform multiple steps - starting with pre-audit preparation, physician and staff training to post audit analysis of issues identified in order to implement a compliance plan that will minimize future audit risk.
By having a third party audit performed, such an audit can identify compliance and documentation issues your organization may be facing and a corrective action plan can be immediately implemented that will bring your organization into CMS guidelines. Third party auditors know exactly what the Medicare RAC's are looking for so when they conduct an audit of an entity, they specifically look for these issues to make sure your practice will avoid the "RAC Attack" should they show up. This will reduce your organizations potential audit risk and give you further reassurance that you are compliant and that your organization is not facing a significant financial risk.
When a third party audit conducts an audit of your entity and identifies compliance issues, this allows you to immediately act upon those issues and implement a compliance program that will correct them moving forward and therefore reduce future errors and reducing the likelihood of future CMS claim denials.
Health care entities that are being pro-active about the Medicare RAC audits employ third party auditors that have been involved with the RAC demonstration project since it began as the auditors help these organizations prepare for and implement a compliance plan in addition to providing proper training in order to reduce potential audit risk. Third party auditors also often assist with responding to RAC determination letters, reviewing RAC claim denials with staff and assisting entities with the appeals process if necessary.
With medical necessity being one of the main areas that RAC auditors focus on, third-party auditors can assist organizations in this area by providing:
· Proper training and education to teach physicians, nursing staff and others involved in the documentation process on how to properly document the medical necessity in the patients chart;
· Guidance on frequent documentation errors that RAC auditors have identified as approved audit issues;
· Education on how to properly document the medical necessity for services such as lab tests, x-rays, etc.
Third party auditors can also assistance to organizations on the pros and cons of handling RAC requests internally vs. outsourcing. Timely responses to RAC requests are absolutely necessary as missed deadlines can mean that your practice waives your right to appeal the RACS determination.
Many smaller organizations lack the resources to respond to RAC requests within the required time frame. For such facilities, hiring a third-party audit firm to review requested claims prior to submission to the RAC auditor and to assist with managing the RAC requests and appeals process is an option worth considering when the amount of money at stake is significant.
The bottom line is the minimal expense paid to a third-party firm to assist your organization in preparing for and managing the RAC requests is nominal compared to the potential financial risk that a Medicare RAC audit could potentially expose your organization too.
As of the date of this article, it has now been mandated that all 50 states Medicaid programs also implement an audit process that mirrors the Medicare RAC audit process. It is clear that audits will continue to increase ten-fold and are by no means going away any time soon.
Calling in professionals to assist your organization may be the best decision you'll ever make. Those that procrastinate in terms of preparing for the "RAC Attack" could potentially be here today and gone tomorrow.
About this Author
Dallas L Alford IV, CPA is a licensed Certified Public Accountant in the state of North Carolina and owner of Atlantic Financial Consulting, a consulting firm that provides comprehensive medical billing services, practice management consulting, coding audits, compliance reviews, physician education and other general medical practice consulting services.
To learn more about Atlantic Financial Consulting and to sign up for their monthly educational newsletter, you may visit their website at http://atlanticfinancial.us or contact Dallas L Alford IV, CPA at 1 888-428-2555, Ext. 200.
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