October 11, 2010

RAC Lessons Learned
By Lisa A. Eramo
For The Record
Vol. 22 No. 18 P. 14

Go inside the RAC program to discover its impact thus far and where it could be headed.

It’s the question on every coding manager’s mind: What have recovery audit contractors (RACs) found since the rollout of the permanent program?

Throughout the year, the Centers for Medicare & Medicaid Services (CMS) has sponsored several nationwide RAC 101 calls to help give providers a glimpse into larger audit trends and findings. Most recently, the agency published the first in a series of several Medlearn Matters articles that highlights high-risk areas of vulnerability, including the timely submission of requested medical documentation and insufficient documentation that fails to support that services were covered, medically necessary, or correctly coded.

However, the still largely unanswered question of what RACs are finding specifically continues to perpetuate an atmosphere of anticipation as providers navigate their way through a barrage of oncoming requests. Additionally, medical necessity reviews began in August, propelling the program forward and spurring even more questions about what RACs will be looking for in terms of documentation.

While RACs may be gaining momentum, many providers continue to struggle with the program’s basics, as evidenced by the operation-related questions asked during conference calls, says Connie Leonard, director of the CMS Division of Recovery Audit Operations. “The providers are concerned with doing things the right way. The RAC program is still new to much of the country, and providers want to understand the process. This is why the calls are still labeled as RAC 101 calls,” she says. “The CMS understands the RAC program is new and complex to a provider.”

Staffing challenges in particular continue to perplex providers, says Kathy DeVault, RHIA, CCS, CCS-P, manager of professional practice resources for the AHIMA. “Even though we’re a year into this, the whole process has been slow,” she says. “When you’re looking at an organization that gets requests for 200 records every 45 days, it’s like a snowball rolling downhill. It’s been difficult in terms of figuring out how much staffing is needed.”

Inconsistent RAC behavior patterns across regions only fuels provider confusion, says DeVault. “One of the frustrations across the board is inconsistencies among the contractors,” she says. “It’s the same with fiscal intermediaries. They interpret things differently around the country, and it makes comparability difficult between different regions or contractors.”

Understand the Importance of RACTrac
The American Hospital Association (AHA) has been doing its part to raise awareness of both the operational and the financial effects of the RAC program through RACTrac, a free Web-based survey launched each quarter to collect information the AHA can use for educational and advocacy purposes. The association disseminates the survey results to members and nonmembers through quarterly reports as well as webinars that typically draw more than 1,000 participants, says associate director of policy Elizabeth Baskett.

“What we experienced during the RAC demonstration program was that there was just a general lack of data and information coming from CMS. That’s why we created RACTrac,” she says.

Baskett agrees that the inconsistency among RACs continues to puzzle—and frustrate—providers. “What we’ve found is that all the RACs are acting differently. They’re separate companies, so they’re not necessarily following each other’s leads. They’re moving at their own pace and in their own direction,” she notes.

Although RACs may be operating with different agendas, one point remains clear: Audits are well under way—and this isn’t likely to change anytime soon. More than two thirds of the 653 hospitals responding to RACTrac experienced RAC activity in the first quarter of 2010, according to an AHA report released in April.

“This is just the impact of the permanent program getting under way. I do expect this number to go up, unfortunately,” says Baskett.

Although the data collected through RACTrac thus far have been primarily high level, Baskett says the AHA may consider collecting more specific information in the future.

“When we created RACTrac, we weren’t quite sure how the permanent program was going to work and what the RACs were going to focus on. We wanted to keep it high level because we wanted it to be relatively easy for hospitals to fill out,” she says. “As we’ve learned more about the RAC program and what they’re focusing on, we always leave open the possibility to make refinements to the survey.”

Hospitals can participate in RACTrac in one of three ways:

• Claim-level tracking tool: Fill out and upload an AHA-created spreadsheet that automatically populates the RACTrac online survey.

• RACTrac compatible vendor: Work with one of several software vendors providing myriad RAC-tracking services to hospitals. Currently, more than 20 of these vendors also offer their clients the ability to submit their RAC data to the AHA in a simple and user-friendly manner.

• Manual survey: An online survey that hospitals can complete themselves without using a spreadsheet or vendor.

“Our overarching goal with the program is to make RACTrac as user friendly as possible for hospitals,” says Baskett. “Hospitals are all different sizes and have all different amounts of resources to handle RAC activity.” The claim-level tracking tool and manual survey options are easy ways to participate in the program without having to spend any money, she adds.

Look for National Trends
In general, the AHA encourages hospitals to learn from the RACTrac findings and take preventive measures to reduce vulnerabilities to RAC audits, says Baskett. However, she notes there are several important national trends that have emerged from the first quarter RACTrac data. One is that smaller hospitals are in no way exempt from RAC audits. Of the 437 hospitals reporting RAC activity, 57% have fewer than 200 beds.

“I think this data point is important for hospitals because I’ve heard from a lot of them that say, ‘Oh, we’re too small or we’re in a rural area and won’t be subject to RAC activity,’ and that’s absolutely not the case,” Baskett says. “RACs are able to do reviews on all sizes of hospitals, and if they find a pattern of error, they’re free to pursue that regardless of the size of the hospital or area in which it’s located.”

Another interesting—though probably unsurprising—finding is that RACs are primarily performing complex reviews. Eighty-eight percent of hospitals with RAC activity reported undergoing complex reviews compared with only 20% that reported experiencing automated reviews.

This focus on complex reviews, particularly in light of the recently approved medical necessity issues, could forecast future denials and is something the AHA will watch closely, says Baskett. Of note is that the average dollar value of an automated denial was $709, with the average dollar value of a complex denial at $6,542.

Two thirds of hospitals reporting automated denials experienced denials for outpatient coding and billing errors. Likewise, nearly all hospitals reporting complex denials (92%) experienced denials for inpatient coding errors. Although incorrect coding has been a major source of denials thus far, Baskett expects insufficient documentation to take center stage as medical necessity audits begin.

“CMS would not be surprised if the medical necessity issues overtook some of the coding issues once [the medical necessity reviews] begin,” Leonard notes. “It will be interesting to determine if the [medical necessity denials] do decrease because providers are being more diligent about documenting the file with the medical necessity of the admission.”

In terms of administrative burden, RACTrac data reveal 84% of responding hospitals reported that RACs affected their organization during the first quarter of 2010. Forty-nine percent experienced increased administrative costs, and 40% hired additional staff members. Baskett says this information helps hospitals trying to move forward and justifies the hiring of additional staff members. It also helps the AHA advocate on behalf of hospitals nationwide to let the CMS know the RAC program’s financial impact, she adds.

For a more in-depth look at the first quarter results, visit www.aha.org/aha/content/2010/pdf/Q1RACTracResults.pdf.

Drill Deeper Into Data
Although RACTrac data are helpful, they may not provide the drill-down data hospitals seek, says Lori Brocato of HealthPort. RACPro, a RACTrac-compatible tracking and management software from HealthPort, provides certain required data points to the AHA and collects other, more detailed information from its customers. Eventually, the company plans to provide community-based reporting that would allow hospitals to search for RAC results by city, zip code, or state. “We want to wait [to release the service] until more hospitals are getting reviewed,” says Brocato. “There are still a lot of them that either aren’t entering data or they just haven’t gotten certain types of reviews yet.”

Still, Brocato says certain national trends among customers have begun to emerge. For example, HealthPort data reveal that RACs are focusing on Medicare severity diagnosis-related groups (MS-DRGs) for services not otherwise specified. The most common target for CGI Federal—the RAC for Region B—is MS-DRG 237, Major cardiovascular procedures or thoracic aneurism repair, not otherwise specified. The total average dollar amount for claims reviewed for this particular MS-DRG in Region B alone is $25,000.

HealthPort data also reveal the most commonly targeted MS-DRG for all RACs nationwide is MS-DRG 982, Extensive operating room procedure unrelated to the primary diagnosis. The most commonly reviewed CPT code for automated denials is 96413, chemotherapy administration.

Like many RAC solutions currently on the market, RACPro is more reactive (rather than proactive) in nature, says Brocato. “However, [these solutions] do give information you can use to go in and perform proactive-type reporting and auditing of your own to determine your level of risk,” she says.

RACPro also provides alerts, reminders, and red flags for corrective action. “When [staff members] enter an audit request (especially complex reviews), there’s a trigger that automatically kicks off based on that RAC letter date for when those records are due,” says Brocato. “They have a report that generates e-mail messages once a request gets within 15 days of its due date; they’ll start getting daily e-mails to let them know they haven’t responded to the request yet. If it gets within two days of a record being due, they start getting two e-mail alerts a day.”

Although the CMS doesn’t endorse any RAC vendor on the market—nor does it currently offer any similar type of tool—Leonard says the agency clearly recognizes the benefits these solutions can offer hospitals. The CMS plans to provide more detailed information about national RAC findings in the future, says Leonard. “CMS is exploring ways to get some providers specific information about their own billing patterns,” she says.

Take Initiative to Prepare for Audits
One of the most effective ways to prepare for RAC audits is to take a closer look at your top 10 DRGs, says Susan deCathelineau, MS, RHIA, healthcare manager for Hyland Software. OnBase, a RACTrac-compatible administration solution from Hyland Software, allows customers to import and subsequently analyze several years’ worth of claims information to identify common DRGs assigned as well as potential opportunities for improvement. More than 1,000 healthcare customers currently use the solution directly for enterprise content management and indirectly for preparing for and responding to RAC requests.

“We provide solutions to capture content. As part of that, RAC was a natural fit in being able to not only take the billing data and analyze the trends internally for that customer to identify improvement opportunities but also to be able to associate that claim information with the medical record documentation that needs to support the claims that were submitted for billing,” says deCathelineau.

The advantage of using a RAC solution to prepare for audits is that it synchronizes a plethora of data to identify trends without necessitating staff members to manually enter and sort information in multiple spreadsheets, says deCathelineau. “OnBase has a central database that provides a high-level overview as well as specific data-related spreadsheets to track an audit,” she says. “OnBase can also present medical record documentation in response to the audit, and it can store the copy of that record for external and internal use, which minimizes the need to have multiple copies of the record.”

Know What the Future May Hold
In looking ahead, the AHA will continue to use and refine RACTrac data to help hospitals prepare for audits and also drive advocacy work. “We do meet with CMS on a monthly basis to discuss any issues we’re seeing with the RAC program that hospitals have raised with us. We haven’t called to their attention the RACTrac data yet. It hasn’t presented any significant concerns at this point,” says Baskett. “But again, the whole purpose of collecting the data is so that if there are some concerning trends, such as a high number of denials that are overturned in appeals, that’s something we may want to raise with the agency or legislators at some point.”

The AHA generally advises hospitals to work directly with their RAC when issues arise, and it also encourages them to contact the association so it can flag the issue with the CMS, when necessary. “We encourage hospital administrators to use the discussion period and call the medical director of the RAC and discuss so they are clear on what exactly the RAC is requiring to prove that the service was appropriate and was billed correctly. We’re also encouraging hospitals that feel they have an inappropriate denial to use the appeals process,” she says.

Baskett says if a hospital isn’t already participating in RACTrac, it should consider doing so to help paint a more accurate depiction of RAC impact nationwide. “It’s a useful tool for the hospital community to let their voices be heard, to help us understand the impact of the RAC program, and hopefully make positive improvements going forward,” she says.

For more information about RACTrac, including how to participate in the program, how to access quarterly reports and webinars, which vendors are RACTrac compatible, which questions are included in the online RACTrac survey, and more, visit www.aha.org/aha/issues/RAC/ractrac.html.

— Lisa A. Eramo is a freelance writer and editor in Cranston, R.I., who specializes in healthcare regulatory topics, HIM, and medical coding.