The Medicare Recovery Audit Contractors (RACs) program pursues improper Medicare payments made to hospitals, physicians and other healthcare providers. The program’s latest iteration features multiple changes aimed at reducing healthcare regulatory compliance burdens, fostering greater transparency and improving program oversight.

“The recent program changes should make life easier for providers who are subject to a RAC audit,” said Joe Lineberry, McKesson Business Performance Services chief compliance officer. “But as the old saying goes, `an ounce of prevention is worth a pound of cure,’ so avoiding a medical claims audit in the first place continues to be best policy when it comes to compliance generally and RACs in particular.”

What can you do to help prevent healthcare audits in the first place?
  • Communication is vital:
    Develop a team approach throughout the revenue cycle. Individuals from patient financial services, case management and health information management must be actively engaged in the process of medical chart reviews and should be ready to submit appeals within specific time frames.
  • Be aware of enforcement trends and identify your problem areas:
    Monitor the Office of Inspector General Work Plan and look for items that apply to your facility or practice. Scour all audit websites such as RAC, Comprehensive Error Rate Testing (CERT), Payment Error Rate Measurement (PERM), to be aware of new focus areas, etc. and review any letters you receive from those programs. Providers can also glean information about the direction that RACs are taking from the Medicare Quarterly Provider Newsletter. The publication is available from the CMS website.
  • Keep a log of inquiries:
    To insure you’re responding completely and timely to those letters and are tracking their focus areas.
  • Implement proactive measures:
    Self police on issues you become aware of. Ensure all services provided are compliant and documented in the patient’s record. That way by the time auditors might come, you’ve already identified issues and implemented corrective actions. Document outcomes in an action plan and re-educate to ensure compliance.

“In the long run, compliance is a lot less expensive than attempting to prove your innocence after an enforcement action has been launched,” said Lineberry. “For physicians, hospitals and other providers, it is critical that coders be fully informed about the latest changes or directives. Ignorance is no defense.”

How do you prepare for an audit?

Providers that do receive an additional documentation request (ADR) should take the following actions:

  1. Respond in a timely fashion:
    It is essential that organizations respond promptly to any RAC communication. Failing to do so can create the impression that the provider isn’t taking the query seriously, or worse, that the delay is an attempt to stall the inquiry. The net result may be that what began as a routine request for information is escalated into a full-blown audit, investigation or unannounced site visit.
  2. Designate a centralized RAC authority:
    Promptly funneling all investigative requests to a centralized authority within the organization – be it the legal or compliance departments, or both – can also serve to mitigate potential problems at the outset of an inquiry. For example, auditors may have questions about a specific action or charge that, on the surface, appears suspicious. However, informed managers or decision-makers within the organization may be able to provide a ready and reasonable explanation for the apparent anomaly, thereby satisfying investigators and quelling further inquiry.
  3. Develop or update your internal audit protocol:
    Healthcare organizations can mitigate the risks associated with a RAC audit by establishing a well-defined process for conducting primary and secondary medical necessity reviews at all points of entry.
  4. Investigate and confirm the scope of any audit:
    If an alleged payment violation identified in a RAC audit can’t be confirmed, or if the alleged overpayment is incorrect or unfounded, providers should consider appealing. It is important to remember that a claim denial or a finding of overpayment resulting from a RAC audit can be appealed through the standard Medicare appeals process.
  5. Resolve confirmed issues before the auditor shows up:
    Undoubtedly the most important step healthcare organizations can take in reducing the risk of an audit is to remove or reduce the incentive for a contractor to pursue the provider in the first place. That means following your plan to identify and eliminate overpayments and other areas of likely scrutiny ahead of time.
An ounce of prevention

Perhaps the most important step providers can take in reducing the risk of an audit is to reduce or remove the incentive for a contractor to pursue your organization in the first place. That means eliminating overpayments and noncompliance. With any audit, the goal will be to proactively improve processes to avoid potential future take-backs.

McKesson can help

McKesson understands how critical a robust healthcare regulatory compliance program is in today’s increasingly complex and unforgiving environment. Our compliance efforts are designed to establish a culture that promotes prevention, detection, and conduct that conforms to federal and state law, private payer healthcare program requirements, as well as McKesson’s ethical and business policies. McKesson Business Performance Services Compliance Program also provides a centrally coordinated mechanism for the timely dissemination of information and guidance on applicable statutes, regulations, and other payer requirements.

For McKesson revenue cycle service clients, we offer a personalized approach that fits the individual needs of the practice or health system. In addition, our consulting group can assist healthcare organizations on an episodic basis in two specific ways:

  1. Assist in setting up a process to track and respond to RAC correspondence.
  2. Perform pre-submission documentation reviews. These reviews assist the organization in sending correct and complete documentation in response to a request as well as help prepare for possible outcomes including denials and determining a course of action if a claim is denied (opportunity for appeal vs. re-payment).

Learn more about how the McKesson Business Performance Compliance Program can help you.

Author - Female

About the author

Lisa A. Schroeder, CHC, CPC, CCS-P is Compliance Director of McKesson Business Performance Services

Author - Female

About the author

Cathy Woodall, CHC, CPC is Compliance Director in Radiology of McKesson Business Performance Services