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6 Important Points on Recovery Audit Contractors

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 created the Recovery Audit Contractor Program to reduce improper Medicare payments, and since its inception, the program has collected more than $2.5 billion in overpayments, as of August 2012.

RACs will continue to crack down on Medicare payments this year, and their audits can be challenging for ambulatory surgery centers and healthcare providers. These government-contracted auditors are separated into four different regions across the country and paid a percent of the improper dollars they discover.

David Ebel, a director and senior CFO consultant at Warbird Consulting Partners, has more than 35 combined years of experience in finance and healthcare. He has worked with numerous healthcare facilities undergoing RACs.

Here are Mr. Ebel's six points on both avoiding and properly handling RACs.

1. Work toward complete documentation. The best line of defense is to get it right the first time, so physicians and coders should work to provide the most complete and accurate documentation and coding initially, especially with increased pressure from RACs.

Often issues singled-out by RACs are not fraud issues, but rather "judgment calls," Mr. Ebel says.

"It's possible for two different people with different motivations to look at the same data and say two different things," he says. "The more judgment involved, the more potential for disagreements."

Conflicting judgment calls cannot always be avoided, but extra vigilance with coding and billing claims can prevent some problems. Coders should strive to double check the diagnosis code, and physicians should include as much information as possible in the medical record. All parties should work to ensure claims support the work that was performed.

2. Know what RACs look for. RACs are limited to looking for issues they have specified in advance, though this is becoming less important, Mr. Ebel says.

The audit contractors must propose an issue to CMS, and once CMS agrees to it, it's posted online. Initially this list of focuses was helpful to healthcare providers, but now the list has grown exponentially.

"It doesn’t help much to know the areas because it's almost covering waterfront," he says.

Despite the growing list of concerns, surgery centers and physicians should be aware of the RACs' main areas of interest and pay particular attention to avoiding those obvious pitfalls.  

3. Be tough and transparent. To protect yourself or your practice from undue RAC attention, be the hardest dollars the contractors collect, Mr. Ebel says. Maintain the attitude that all of your billing decisions were worthy and correct, rather than doubting them as soon as an auditor questions the legitimacy.

"Your posture needs to be, 'Of course the coding is right. Of course the surgery was necessary,'" he says. "Tell them why you think whatever they are denying is in fact appropriate."

Don't second guess your decisions. ASCs that are quicker to back down on their billing judgment calls are quicker to get fined by audit contractors.

While being firm, centers should also be fully cooperative and transparent. If you participate in Medicare, you are legally obligated to provide RACs with the claims they request. Contractors are allowed to request up to 400 medical records to review every 45 days.

"You have to provide them with records," he says, "but the general principle is if you don't want a lot of attention, you want to be the hardest dollars they find."

4. Appeal all disputed claims. If an RAC brings any of your records into question, then the hardest decision should be not to appeal the denial, Mr. Ebel says, rather than why to appeal a case.

Many centers make the mistake of leaving the decision to appeal up to the coder, who may not want to expend the effort required for an appeals process, he says. The surgery center owners should intervene and insist all denials are defended.

"It is important to be sure your process is oriented toward defending what you have done until it's indefensible," he says. "There is effort involved, but it means you are the tougher dollars, and it will serve you well in the long run."

ASCs have many options for disputed claims. If a recovery contractor does not agree with your defense, the next step is a qualified independent reviewer. If the reviewer does not side with your case, then an administrative law judge can look at it. The next step is to take it to district court.

Government statistics show appeals have a 90 percent denial rate, but, according to Mr. Ebel, that number is misleading. Each level of a single appeal is counted as a separate denial, even if is the same case. Often, appeals are overturned and never reach the point of being ultimately successful. "The record is much closer to 75 percent of appeals being ultimately successful," he says.

There are obvious costs involved in undergoing an appeal, but it can be a good investment for centers being asked for large recovery payments.

5. Scour for additional supporting information. Any center pursuing an audit appeal needs to dig for additional supporting information that may not have been included in the submitted claim.

This information can include an office back-up record, a nurse's notes, or anything else not taken into consideration by the auditor.

The first step should always be to go back to the attending physician and other clinical people involved. The administrator should find out if any details were left out of the report — or if staff members or physicians have notes to further support the claim.

"We ought to be looking at why shouldn't we appeal this," Mr. Ebel says, "rather than scouring records for things that might justify the denial."

6. Consider financial ramifications. ASCs choosing to undergo an appeals process should be aware that any money being solicited by the RACs will accrue interest while an appeal is underway.

Centers have the option to either pay back the requested money prior to appealing, with funds being restored for a successful appeal, or to hold off on a repayment until after the appeal concludes.

"You need to look at it closely," Mr. Ebel says. "If your appeal probabilities are not very strong, you may want to pay it back. In other cases, you know you are right, and you are not going to pay it back."

Consider it on a case-by-case basis, while keeping in mind that those interest rates for large sums of money may be significant.

More Articles on Coding, Billing and Collections:
4 Lessons From HIPAA 5010 Transition to Apply to ICD-10
American Sleep Medicine Paid $15.3M for Improper Billing
CMS to Delay Enforcement of Electronic Information Exchange Rules

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